13% growth in consumption expenditure in the UAE retail sector by 2023.

In a new report, The State of the Retail Economy in the United Arab Emirates as of 2023

In a publication by Majid Al Futtaim, it is stated that the country's economy remains resilient despite recent geopolitical tensions and unfavorable economic conditions. The country's gross domestic product has grown by 3% due to strong performance in the oil and gas sector.

The report highlights the key economic data.

Trends and perceptions of consumer behavior, spending, and the sentiments of members of UAE society. Consumer spending in the retail sector showed strong growth throughout the year, increasing by 13% in 2023 compared to 2022. In the second half of 2023, there is a slowdown in the retail sector compared to 2022, which can be attributed to the impact of the 2022 FIFA World Cup and the rise in tourism during that period.

Retail spending in 2023 was evenly distributed between the first and second halves of the year, with a 14% increase in the retail sector in the UAE. The report indicates a growth in consumer spending in the UAE of over 13% in 2023 compared to 2022, including an increase in the fashion sector (31%), overall retail (16%), entertainment and leisure (15%), hypermarkets and supermarkets (3%), as well as a 12% rise in spending in non-retail sectors such as real estate (100%), fuel and gas (28%), transportation (57%), and airlines (25%).

Ahmed Jalal Ismail, the CEO of Majid Al Futtaim Holdings, stated that the social and economic ambitions of the UAE contribute to the long-term prosperity of the country. Over the past 12 months, the flexibility adopted by the country in confronting external pressures, combined with progressive policies and a business environment friendly to investors, has strengthened the UAE's position as a beacon in the Middle East and North Africa.

Based on the positive dynamics of the retail economy, the UAE is in a favorable position to continue sustainable growth in the future. The country has managed to reduce inflation from 5.2% in 2022 to 3.3% in 2023, which is significantly lower than the global average (6.9%) and the average in the Middle East (13.9%), protecting consumers from the negative effects of global price increases.

Online trading has gained significant traction in the UAE since 2019, with the share of e-commerce accounting for about 12%, and nearly 70% of transactions being made through mobile devices. Thanks to the increased opportunities for online shopping driven by the explosive growth of e-commerce, consumer spending in retail rose by 15% in the UAE in 2023, according to data from Majid Al Futtaim for points of sale.

The travel and tourism sector in the UAE also demonstrated significant growth in 2023, surpassing pre-pandemic levels for the first time. More than half of international visitors (53%) come from Western Europe, South Asia, and Gulf countries. The number of Chinese tourists has also increased significantly, rising by 287% compared to 2022. In Dubai alone, 17.2 million visitors (for one night) stayed in 2023, which is 19% more than the previous year, and Dubai International Airport had the highest number of passengers in a quarter since the third quarter of 2019. As a result, hotel occupancy reached a record high of 77% in 2023, compared to 73% in 2022. The success of the travel and tourism sector in the country aligns with the "National Tourism Strategy 2031," which aims to attract tourism investments worth 100 billion dirhams and host 40 million guests in hotels by 2031.

After a successful performance in 2022, the real estate sector in the UAE continued its development in 2023, setting new records for sales volume and property value. Transactions increased by 18% compared to 2022, while sales value rose by 39% to 370 billion dirhams in 2023. The increase in property prices in Dubai is particularly notable, with an annual growth rate of over 20%, making it the second fastest-growing real estate market in the world.

The report discusses the ongoing stable growth of the UAE economy and favorable prospects for the future.