ABU DHABI: International Monetary Fund (IMF) has revised down real GDP growth forecast for the UAE to 2 per cent for 2018 and 3 per cent for the next year.
In October 2017, IMF had predicted 3.4 per cent growth for the UAE for 2018. According to the Ministry of Economy estimates, GDP will grow by 3.9 per cent this year.
Data in the IMF’s Global Prospects and Policies report released on Tuesday predicted that inflation in the UAE is also projected to spike this year to 4.2 per cent from 2 per cent last year. But it will ease to 2.5 per cent in 2019.Analysts believe that the recently-introduced 5 per cent value-added tax in the UAE and Saudi Arabia could be one of the key reasons for the spike in inflation this year.
World Bank has also projected 2.5 per cent GDP growth for the UAE in 2018, higher than last year, as oil production capacity is expected to increase and the strength of the non-oil economy will boost prospects particularly later in the forecast period as megaproject implementation ramps up ahead of Dubai’s hosting Expo 2020.”Export earnings will pick up gradually, with non-oil goods trade and services outpacing oil export growth, although the current account will remain in modest surplus. The 2018 budgets presented by different emirates and the federal government over the last few months are expansionary, with Dubai’s budget containing a notable uptick in infrastructure spending. However, on the back of higher oil prices, improved oil production capacity and higher non-oil revenues, the fiscal deficit is projected to reverse by 2020.
