ABU DHABI: The UAE’s high-performing non-oil sectors are expected to drum up growth with the country’s private consumption likely to remain among the main drivers of growth in 2018, said a global credit insurer.
The private sector growth will be driven by household consumption and higher international tourism. The country’s domestic appliances, metals and pharmaceutical sectors will be the fastest-growing ones while ICT and machinery will be the slowest growing ones, Coface said in its GCC Economic Outlook.
“We believe the UAE is a safe haven despite regional uncertainties and geopolitical situation,” Seltem Iyigun, Coface economist for Middle East, said.
The recently rolled out Value Added Tax will drive in more government revenues given the UAE’s large consumer base and the importance given on retail spending, especially from foreign visitors, she said.
In the wake of VAT, inflation rate in the UAE is predicted to be higher than last year (2 per cent in 2017 versus 3.7 per cent in 2018).
Across the GCC, the real GDP growth rates are expected to grow to around 2.3 per cent compared to 0.6 per cent in 2017. However, growth will remain below pre-2014 levels due to volatile energy prices and geopolitical uncertainties.
“We see a slight recovery in the growth momentum of GCC nations’ GDP on rising oil prices. The recent extension in oil production cut is a positive sign for oil price outlook in the near term, but prices remain volatile,” Iyigun said. Oil prices have averaged $54 a barrel in 2017, up from $46 in 2016, and are expected to average at $57 in 2018.
