The UAE economy, resilient to global and regional headwinds, has been on a steady rebound in , despite predictions of a slowdown in economic growth elsewhere in the region. Economists and analysts predict that the UAE - marking its 46th year as one of the fastest-growing economies in the world - is set to almost double its expansion rate in The Institute of International Finance IIF affirms that the UAE is on track to be one of the best performers among the Middle East and North African economies over the next five years as its vibrant growth continues to be driven by trade and tourism.
Riding a wave of diversification, particularly into tourism, non-hydrocarbon trade and financial services, the economy is better-positioned than its peers to continue to mitigate the adverse impact of low oil prices. Hydrocarbon GDP accounts for only 30 per cent of total GDP and oil exports for slightly less than 40 per cent of total exports. The International Monetary Fund said in its latest outlook for the UAE that better days are ahead for the country with the economy right on track for a rebound with a 3.
The IIF said the UAE's economic performance would improve in and with firming oil prices, an improvement in global trade and the expected easing pace of fiscal adjustment. But headline growth - oil and non-oil combined - will decelerate to 1.
Several high frequency economic indicators, including the Purchasing Managers' Index [PMI], retail sales and number of tourist arrivals over the first nine months of , suggest improvement in sentiment and private sector activity," said the IIF. Non-oil activity in Abu Dhabi is improving after a challenging two years during which deep government spending cuts slowed activity.
Key projects, such as the construction of nuclear plants and airport expansion, are progressing, albeit with delays, economists said. While inflation in the UAE will remain subdued as the continued decline in rents offsets higher imports prices, inflationary pressures from the introduction of VAT on January 1, will be partly offset by further declines in rents.
Banks in the UAE are well-regulated and supervised and continue to weather the effects of low oil prices and the moderation in non-oil economic activity. Most analysts expect annual credit growth to recover from 1.
They are also of the view that ongoing UAE reforms to develop the domestic capital markets would increase financing and saving options in the economy. The momentum will further gain pace in to post 3. Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said that the outlook for the economy is brightening despite regional and global macroeconomic challenges.
He noted that low oil prices are providing an impetus for Gulf economies to diversify away from the oil industry. The World Bank official, however stressed the need for the private sector to drive most of the economic growth, and private-public-partnership models will be very important in securing that.
He believes that the privatisation drive will help prop up the capital markets. The Washington-based IMF has projected a 1. While consumer price inflation in the UAE will edge up slightly from 2.
According to the UAE Vision plan, the creation and maintaining of a sustainable and diversified economy is a key component of future planning, and progress has continued to be made towards that objective. The intention is that, by , the UAE will have an economy that is flexible in adopting new economic models and that is able to capitalise on global economic partnerships to guarantee long-term prosperity for current and future generations of Emiratis.
Developing a 'competitive knowledge economy' is one of the pillars of the UAE National Agenda in line with Vision According to an official report by the Ministry of Economy, the government has continued in to focus on the UAE becoming the economic, tourist and commercial capital for more than two billion people. To achieve this, the government has set 12 key performance indicators: Effective October 1, , the UAE marked the beginning of a new era in its history, as it started implementing excise tax, exactly three months ahead of the launch of value added tax, another landmark region-wide tax initiative.
Initial estimates suggest that the tax will generate up to around Dh7 billion in annual revenues for the federal budget. In the key oil and gas sector of the economy, the most significant development of the year was the announcement that the Abu Dhabi National Oil Company Adnoc , was to list a minority stake in its subsidiary, Adnoc Distribution, on the Abu Dhabi Securities Exchange. At an international level, the UAE has continued to perform well against its competitors.
In the most recent edition of the Global Competitiveness Report , issued by the World Economic Forum, the UAE topped the Arab world and ranked 17th globally in the global competitiveness ranking. The report also ranked the UAE among the top 20 competitive economies globally for the fifth consecutive year.
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Filed on December 2, Last updated on December 2, at Nation's resilience puts it on track to double economic growth in - and that's just the start as the outlook is even brighter beyond that.
Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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