IMF lifts UAE growth view on higher oil prices

It said continued reforms to promote the private sector and strengthen policy frameworks and coordination would improve medium-term prospects and diversify sources of growth.

The UAE, both at federal and each emirate level, have announced a host of reforms and initiatives such as reducing fee for licences, Dh50-billion stimulus package, 10-year visa for investors and professionals among others to improve country’s economic growth and make it more competitive.

YS Shashidhar, partner and managing director, Frost & Sullivan, said the government’s initiatives and stimulus package will certainly boost UAE’s GDP.

“Yes, certainly. The UAE government’s initiatives and stimulus will increase the UAE’s GDP. Overall, one can expect a growth of 1.5 to two per cent, but more importantly the focus will be on non-oil growth which could grow in the short term by 2.5 to three per cent. However, in the medium term, with all the industrial strategies in place, it could also clock a growth of more than four per cent,” Shashidhar added.

Lenie Assaad, associate at Al Etihad Financial Advisors, said with constant government initiatives including increased investments in infrastructure, a buoyant trade and tourism sector, crucial policy that lower commercial fees and special visa controls, the UAE’s economy is bouncing back with a noticeably improved performance. With governmental strategies of guidance, incentive and control, the UAE is expected to undergo a positively impacted growth in the upcoming months. “Economic diversification in the UAE is encouraged by shifting to an innovation and knowledge-based economy, contributing to a more sustainable growth within the country. This shift will not only increase investments by multinational firms, but also enhance market performance following a facilitated information dissemination, enabling the UAE to compete on an international level.”

“Over the medium term, as oil prices are projected to soften, a return to the path of gradual fiscal consolidation would help save an adequate portion of the exhaustible oil income for future generations. Continued improvements in spending efficiency and strengthening non-oil revenue, including by gradually replacing a system of numerous and regressive fees with corporate taxation, would help achieve these goals,” the IMF said.