Stronger UAE non-oil growth to drive GDP

Abu Dhabi and Dubai GDP to grow in excess of 3% next year — IMF

The UAE’s Gross Domestic Product (GDP) growth is poised for a convincing recovery next year led by strong improvement in nonoil sector growth according the International Monetary Fund (IMF).

“Economic diversification efforts of the UAE led by both Dubai and Abu Dhabi and some of the efforts at structural reforms are getting reflected in economic growth outlook of the UAE next year,” said Jihad Azour, Director of the IMF’s Middle East and Central Asia Department.

The UAE’s economic growth, which faced a persistent slowdown from 2015, is expected to bounce back next year, according to the IMF. The IMF has projected 1.3 per cent growth in the UAE’s real GDP in 2017, which it expects to surge to 3.4 per cent next year.

Dubai’s GDP growth for next year is projected at 3.5 per cent compared to 2.9 per cent and 3.3 per cent in 2016, and 2017 respectively.

Abu Dhabi’s GDP is expected to grow 3.2 per cent in 2018 compared to a meagre 0.3 per cent this year and 2.8 per cent last year. The IMF expects a strong bounce back in oil and non-oil GDP of Abu Dhabi next year to 3.1 per cent and 3.3 per cent respectively compared to -2.7 per cent and 3.2 per cent, respectively in 2017.

Oil-importing countries in the Middle East and North Africa, Afghanistan and Pakistan (Menap) region are expected to report resilient and inclusive growth in economic activity in the year ahead according to the Regional Economic Outlook of the International Monetary Fund (IMF).

“Oil-importing countries from the region are projected to expand by 4.3 per cent in 2017, well above the 3.6 per cent reported in 2016. This projected expansion which is mildly stronger than the 4 per cent growth forecast in the May 2017 is expected to be broadbased, with growth forecast to accelerate in most oil importers, supported by domestic demand and exports,” said Jihad Azour, director of the IMF’s Middle East and Central Asia Department.

In the medium term, growth in Menap oil importers is projected to continue improving gradually, with growth reaching 4.4 per cent in 2018 and averaging 5.3 per cent during 2019—22.

“Despite the broad based economic recovery in these economies, this pace of growth will be insufficient to generate enough jobs to absorb those who are currently unemployed, as well as the millions of job seekers who will enter the labour market over the period,” said Azour.

The average fiscal deficit in MENAP oil-importing countries is expected to narrow slightly from 6.8 per cent of GDP in 2016 to 6.6 per cent in 2017, and further to 5.6 per cent in 2018.