IMF forecasts higher GDP growth for UAE
WELCOMES LIBERALISATION OF FOREIGN INVESTMENT, LONG-TERM VISAS
The UAE’s economic growth is expected to strengthen over the next few years on higher oil prices and increased government spending, the International Monetary Fund (IMF) said.
The IMF lifted its forecasts for economic growth following the conclusion of Article IV Consultation. “With oil production and government spending set to rise, overall growth is projected to strengthen to 2.9 per cent this year and 3.7 per cent next year,” said Natalia Tamirisa, the IMF team leader of the 2018 Article IV Consultation.
The UAE’s Gross Domestic Product (GDP) grew 0.8 per cent in 2017, according to preliminary data. In April, the IMF had predicted GDP would expand 2 per cent this year and 3 per cent next year.
The IMF team observed that the UAE needs more fiscal easing in the near term and once the recovery gains momentum the government could return to a path of gradual and growthfriendly fiscal consolidation.
The current account surplus will exceed 7 per cent of GDP this year. “Given large fiscal buffers, ample spare capacity, and rising investment needs for Expo 2020, the government has appropriately switched to providing stimulus to the economy. Front-loading stimulus measures and focusing them on productive spending, consistent with the Vision 2021 goals of diversifying the economy and raising productivity, would augment their impact on growth,” said Tamirisa.
The IMF welcomed the UAE’s recently announced plans to liberalise foreign investment, introduce long-term visas for professionals, and ease licensing requirements and business fees.
As part of the financial sector reforms the IMF team also called for continued upgrading of bank regulations and strengthening bank supervision to maintain the resilience of the banking system.
Social development and the social benefits programme will be the major beneficiaries of the UAE Federal Budget in 2019 as the government boosts spending for the welfare of its citizens.
The total budget allocation for the year is Dh60.3 billion, up 17.3 per cent compared to Dh51.4 billion in 2018. The 2019 federal budget is the largest to date in the federal government’s history.
Social development and the social benefits programme will receive a Dh25.5 billion budget in 2019 representing 42.3 per cent of the total allocation.
Spending on public education and the health-care sector will also be higher with the budget set at Dh10.3 billion and Dh4.4 billion respectively, officials from the Ministry of Finance said yesterday.
“[The] Ministry of Finance has been keen on developing the federal general budget for the fiscal year 2019 to achieve the vision and direction of the UAE’s wise leadership, who stressed the need to provide a decent life for retired citizens and military personnel, provide the highest security and justice services for both nationals and residents and provide world class educational programmes, as they Per capita income has increased by 12.2 per cent in the UAE during the past five years, according to the Federal Competitiveness and Statistics Authority (FCSA).
The FCSA said that at fixed prices, the per capita income increased from Dh138,700 in 2013 to Dh155,600 in 2017, while the Gross Domestic Product during that same period rose from Dh1.25 trillion to Dh1.42 trillion.
The data also showed that inflation rate decreased from 6.5 per cent in 2015 to 3.6 per cent in 2017. aid future generations reach a knowledge based economy,” said Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, while addressing the media in Abu Dhabi.
The funds for programmes to guarantee social rights and activate community integration in the Ministry of Community Development amounts to Dh3.2 billion, representing 5.3 per cent of the budget.
Housing programme
In addition, Dh1.6 billion is earmarked for the Shaikh Zayed Housing Programme to provide suitable housing for Emiratis and Dh4.5 billion for the social benefits and pension programme.
The government also allocated Dh22.6 billion or 37.4 per cent of the budget to the department of government affairs and Dh2.5 billion for the policies programme to support the nation’s relations regionally and globally. To support infrastructure and economy development, the government will spend Dh1.7 billion or 2.8 per cent of the budget in 2019.
“The UAE Cabinet’s approval of the 2019 federal budget at Dh60.3 billion, is pragmatic, real GDP growth enhancing and maintains the government’s firm strategy of the focus on fiscal stimulus,” Ehsan Khoman, head of Mena Research and Strategy at MUFG Bank Ltd told Gulf News.
The UAE Cabinet’s approval of the 2019 federal budget at Dh60.3 billion, is pragmatic, real GDP growth enhancing and maintains the government’s firm strategy of the focus on fiscal stimulus” Ehsan Khoman | Head of Mena Research and Strategy at MUFG Bank Ltd