Dubai is weathering an oil-led economic slowdown afflicting its Gulf neighbours and will enter a period of “rapid acceleration” in the buildup to the Expo 2020 trade fair, the International Monetary Fund has said.
Speaking to Bloomberg, the fund’s mission chief for the UAE Zeine Zeidane said he expected 3.3 per cent GDP growth in Dubai this year, but preparations for the international event would boost this to 5 per cent by 2020.
In contrast, the IMF expects neighbouring Abu Dhabi to grow 1.5 per cent this year from 4.3 per cent in 2015.
Zeidane said Dubai’s “diversified economy” would help it overcome the negative impact of lower oil prices felt by regional exporters.
He also cited factors including its safe-haven status, a weaker dollar and the strong performance of trading partners like India as cause for optimism, according to Bloomberg.
On a national level, the IMF forecasts the UAE to expand 2.3 per cent this year, largely due to the slowdown in oil-rich Abu Dhabi.
“Abu Dhabi has delivered strongly on fiscal consolidation in 2015,” Zeidane said. He added that Abu Dhabi and the UAE as a whole “have large fiscal buffers that provide them with policy space to adjust to new market conditions, and they should use the fiscal space they have.”
Governments across the region are expected to post sizeable fiscal deficits this year due to lower oil revenues.
Ratings agency Moody’s said in March the regional deficit would reach 12.5 per cent of GDP this year, up from 9 per cent in 2015.
Fiscal deterioration is expected to be faster in Saudi Arabia, Bahrain and Oman than the UAE, Qatar and Kuwait.