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*IMF Expects UAE To Post High Growth Again This Year

Fund also sees the deficit in federal budget becoming a surplus

Fund also sees the deficit in federal budget becoming a surplus. The UAE’s economy jumped by more than 12 per cent last year and is projected to grow by at least five per cent this year due to strong oil prices and high non-oil growth.

In current prices, the country’s gross domestic product is forecast to hit a record high of Dh310.8 billion ($84.6 billion) this year and the non-oil economy will again be the dominant component, according to the International Monetary Fund (IMF).

The expansion means the UAE will remain the third largest Arab economy after Saudi Arabia and Egypt although experts believe it will overtake the Egyptian economy in the next few years thanks to steady non-oil growth and higher crude output.

From Dh263.4 billion ($71.7 billion) in 2002, the UAE’s GDP leaped by about 12.1 per cent to Dh295.4 billion ($80.5 billion) last year, one of the highest nominal growth rates in the world, according to figures by the IMF.

Its forecasts showed the GDP would expand by around 5.2 per cent in current prices to a record Dh310.8 billion this year. The high nominal growth was propelled mainly by strong oil prices as they surged by nearly $4 last year and are projected to grow more this year.

In real terms, the GDP growth was far lower, estimated at around seven percent last year and 2.4 per cent this year, taking into account inflation rates of between 2.6 to 2.8 per cent.

Projections

IMF projections showed the UAE’s economy would grow this year despite an expected decline in crude output over the previous year. It expected average output at around 2.47 million barrels per day compared with 2.59 million bpd last year but forecast oil prices would grow to around $29.5 a barrel from $28.1 in the same period.

“Oil exports are still heavily influencing the UAE’s economy, but you should not underestimate progress made in the non oil sector,” said an Abu Dhabi-based bank manager.

“The UAE’s economy is becoming one of the most diverse economies in the GCC thanks to substantial diversification programmes, mainly in Dubai.”

Strong oil prices have also had a positive impact on the UAE’s internal and external fiscal situation, with a forecast federal budget deficit turning into an actual surplus by the end of last year, according to the IMF.

The shortfall of around Dh2.21 billion ($602 million) will likely turn into a surplus ofDh140 million ($38.1 million) as was the case in most previous years thanks to higher revenue and spending cuts.

As for the external balance, the IMF forecast a current account surplus of around 6.3 per cent of the GDP this year compared with 6.9 per cent last year.
(Source: Gulf News)