ABU DHABI: The UAE’s economic growth is expected to hit 3.9 per cent year-on-year for 2015, due to volatility in international energy markets, according to National Bank of Kuwait.
In a report, the lender said that the country’s resilient non-oil sector and a recovery in oil GDP would drive GDP growth higher in 2017. Real oil GDP is expected to slow from 4 per cent year-on-year in 2014 to 1.6 per cent in 2015, with continued weakness expected in the near-to-medium term.
NBK said that non-oil sector growth would hit 5.5 per cent and 6 per cent for 2016 and 2017 with oil GDP only returning to growth in 2017. The country’s Market Purchasing Manager’s Index also trended lower throughout 2015 against a backdrop of a stronger US dollar and weak global demand, the bank said. In Q4 the UAE’s PMI averaged 53.9 down from 56.7 in the other three quarters of the year, but still indicated signs of expansion. The UAE’s fiscal balance is expected to swing from a surplus of 4.2 per cent of GDP in 2014 to a 1.2 per cent deficit in 2015, rising to 1.5 per cent in 2016.
However, the country’s financial reserves, which account for 200 per cent of GDP, made any significant fiscal consolidation unlikely in the medium-term, NBK said. The fiscal balance is expected to return to a surplus in 2017 on the back of an expected oil price recovery and planned increase in oil production. Infrastructure spending is expected to continue in Abu Dhabi and even accelerate in Dubai in the run-up to Expo 2020, according to the bank.
