UAE adjusts well to new oil market realities: IMF

dubai — The UAE is adjusting well to the new oil market realities and growth is set to rebound, International Monetary Fund (IMF) said on Monday.

Natalia Tamirisa, who headed the IMF mission to the UAE for the annual Article IV discussions, said the UAE’s “large financial buffers, diversified economy and the authorities’ robust policy responses are facilitating the adjustments while safeguarding the economy and the financial system.”

“Growth is set to rebound. Non-oil growth is projected to rise to 3.3 per cent in 2017, reflecting more gradual fiscal consolidation, stronger global trade, and higher Expo 2020 investment. Oil GDP is projected to decline by 2.9 per cent reflecting agreed Opec cuts in oil production,” Tamirisa said in a statement.

The findings of the mission to the UAE, subject to management approval, will be presented to the IMF Executive Board for consideration by end-June 2017. “As a result, overall growth will ease to about 1.3 per cent in 2017, before recovering to above three per cent over the medium term. Average inflation is projected to rise to 2.2 per cent in 2017. With the prospects of firmer oil prices, the government’s budget deficit is projected to decline to 4.5 per cent of GDP and the current account surplus to improve to 2.4 percent of GDP in 2017,” she said.

“Existing financial buffers allow fiscal consolidation to proceed gradually. Reaching the goal of returning gradually to a balanced budget over the medium term would save resources for future generations. This requires continued efforts to rationalize spending and improve its efficiency, including through careful cost-benefit analysis and continued review of government-related enterprises’ (GREs) infrastructure investments.”

— issacjohn@khaleejtimes.com