UAE to grow faster at 3.8pc on higher oil prices and re­forms

The Pak Banker - - FRONT PAGE - DUBAI -AP

In­creases in oil prices cou­pled with eas­ier fis­cal con­sol­i­da­tion and re­forms will help the UAE, the most di­ver­si­fied econ­omy in the GCC, to reg­is­ter a higher growth of 3.8 per cent in 2018, world-lead­ing trade credit man­age­ment com­pany said.

While eco­nomic di­ver­sity has made the se­cond largest Arab econ­omy an out­per­former in the re­gion by avert­ing a fall into re­ces­sion in the cur­rent era of lower en­ergy prices, the UAE stands to ben­e­fit from big in­ter­na­tional events such as the Dubai Expo 2020 and the Qatar 2022 World Cup as they will spur tourist traf­fic to the re­gion, an­a­lysts at Co­face said as they fore­cast global econ­omy to peak at 3.2 per cent in 2018.

The UAE growth pro­jec­tion by Co­face is among the most up­beat com­pared to fore­casts made by the In­ter­na­tional Mon­e­tary Fund and other or­gan­i­sa­tions while close to the 3.9 per cent pre­dicted by the Cen­tral Bank.

The Wash­ing­ton-based fund has pro­jected UAE's real GDP to surge to 3.4 per cent in 2018 from a 1.3 per cent in 2017. A joint re­port by the In­sti­tute of Char­tered Ac­coun­tants in Eng­land and Wales and Ox­ford Eco­nomics said the UAE would record 3.6 per cent growth in 2018 from 1.7 per cent in 2017.

In its an­nual "Coun­try and Sec­tor Risks Anal­y­sis 2018," Co­face said Saudi Ara­bia, Arab world's largest econ­omy, would grow at 1.2 per cent in 2018, Bahrain two per cent, Oman 3.8 per cent, and Kuwait 3.1 per cent.

"In the UAE, pri­vate con­sump­tion will likely re­main among the main growth driver in 2018, sus­tained by house­hold con­sump­tion and higher in­ter­na­tional tourism," said the re­port.

The in­tro­duc­tion of VAT from Jan­uary 2018 is not ex­pected to rep­re­sent a sig­nif­i­cant drag on UAE's growth. "How­ever, sub­dued oil prices will likely pre­vent the econ­omy from record­ing growth rates as high as pre2014 lev­els," it said.

With the slow re­cov­ery in oil prices since early 2017, the bud­get deficit will start to nar­row. This is set to re­sult in higher spend­ing on in­fra­struc­ture, con­struc­tion, and in­vest­ment, world's lead­ing credit in­surer said.

Glob­ally, Co­face fore­casts a growth of 3.2 per cent in 2018. In emerg­ing coun­tries, the re­cov­ery is ex­pected to be stronger (with growth of 4.6% ac­cord­ing to Co­face) and above all more syn­chro­nized. In ad­vanced coun­tries, the down­ward trend in in­sol­ven­cies con­tin­ues but is be­gin­ning to run out of steam (the fore­cast de­cline is only 1.8 per cent in 2018, af­ter a six per cent drop in 2017) as many coun­tries have al­ready re­turned to their pre-cri­sis lev­els.

In 2018, the up­turn is ex­pected to con­tinue but cor­po­rates risk is over­heat­ing. Hav­ing be­gun with the threat of pro­tec­tion­ism and punc­tu­ated by numer­ous elec­tions and po­lit­i­cal crises, 2017 held some pleas­ant eco­nomic sur­prises. Only thir­teen coun­tries ended the year in re­ces­sion, com­pared with twenty-five in 2016, Co­face said.

Global trade made a spec­tac­u­lar leap, grow­ing 4.4 per cent in af­ter 1.5 per cent in 2016, while the risks asso- ciated with pro­tec­tion­ism did not ma­te­ri­al­ize: the net num­ber of pro­tec­tion­ist mea­sures world­wide reached 283 in 2017 (against 374 in 2016), de­spite in­creas­ing in the United States. Busi­ness was stronger than ex­pected in the United States, Europe and sev­eral emerg­ing coun­tries where it was sup­ported by the grad­ual rise in price of sev­eral com­modi­ties.

Among the win­ners in the ac­cel­er­a­tion in global trade were sev­eral open economies whose coun­try as­sess­ments im­proved: the Nether­lands, South Korea, Tai­wan, Sin­ga­pore and Hong Kong, Co­face said. Mean­while, UAE is in­ten­si­fy­ing its ef­forts to pro­mote its re­la­tions with South­east Asian coun­tries, which are among the fastest grow­ing economies in the world with growth rates ex­ceed­ing six per cent for some economies.

This in­cludes Malaysia, which al­ready en­joys decades of strong links with the UAE, of­fi­cials at the UAEMalaysia Busi­ness & In­vest­ment Fo­rum in Kuala Lumpur said.

HONG KONG -AP

Vis­i­tors pose for pho­to­graphs in front of a weapon on the deck of a Peo­ple's Lib­er­a­tion Army ship dur­ing an open day at the Ngong Suen Chau Bar­racks in Hong Kong.

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