The UAE economy will grow 3.6 per cent in the current year on the back of higher oil prices and supported by investment, trade and rising tourist arrivals, according to the International Monetary Fund, or IMF.
The IMF, in its final statement on Article IV discussions it conducted recently to assess the financial and economic performance of the second biggest Arab economy, has highlighted the positive indicators of the UAE’s overall economy.
The fund projected a gross domestic product growth of 3.6 per cent in 2013, which is a result of economic activities supported by investments, trade, tourism and logistics support. “This growth is expected to rise to 3.7 per cent in 2014 and 3.8 per cent in 2015,” it said. Welcoming the report, Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs, said “The IMF gave away a clear picture of the UAE’s economy.”
“In fact, the report highlighted a notable recovery from the financial crises that engulfed the world, where the economy is actually witnessing strong growth that guarantees a solid business environment for investors that is supported by legislations able to support it and to aid it in achieving more growth,” the minister said.
Nonoil growth is expected to further grow in 2013 to reach 4.3 per cent, helped by a recovery in construction and real estate, as well as ongoing growth in tourism oriented sectors and an expansion of hydrocarbon production by 5.2 per cent. The UAE’s current account rose to 17 per cent of national GDP in 2012 due to a rise in oil prices, in addition to the recovery of nonoil exports.
The IMF’s report indicated the decrease of inflation to 0.7 per cent compared to 0.9 per cent of GDP in 2011. However, the fund is anticipating an rise in inflation to two per cent in 2013, followed by an increase of 2.4 per cent in 2014 and 2.5 per cent in 2015.
Exports would reach $367 billion in 2013 and will continue to rise to $393 billion by 2014, followed by $420 billion in 2015, against $299 billion in 2011 and $347 billion in 2012. In line with the expected medium term recovery in the nonoil industry, the sector will grow by 4.2 per cent in 2015, where the IMF projects a rise in exports to $109 billion in 2013, $120 billion in 2014 and $134 billion in 2015, compared to $96 billion in 2012 and nearly $71 billion in 2011.
The IMF expected domestic investments to rise to 15.6 per cent of GDP in 2013 and to reach a total ratio of 17 per cent in 2014 and 18.7 per cent in 2015, compared to 14.2 per cent in 2012 and 16.2 per cent in 2011. These were distributed between public investments at 6.1 per cent and nongovernmental investments at 12.6 per cent, placing the UAE as a safe haven for investments and investors.
The positive steps taken by the federal government to further strengthen the UAE’s economy through macroeconomic policies, along with the policies which support the financial sector’s stability, led to the economy’s recovery and strengthened the state’s ability to overcome the barriers of the global financial crisis.