The International Monetary Fund (IMF) has revised the UAE’s 2014 GDP forecast to 4.4 per cent on the back of rising real estate prices and the Expo 2020 win.
The fund predicted last October that the UAE economy will grow by 3.9 per cent in 2014 but raised its forecast to 4.5 per cent in February hailing a property boom.
“In the United Arab Emirates, where real estate prices are rising at a fast pace, the award of World Expo 2020 has further strengthened growth prospects,” the IMF said in its latest World Economic Outlook.
It also upgraded the previous year’s GDP growth to 4.8 per cent from four per cent.
Speaking at the Annual Investment Meeting yesterday, UAE Economy minister Sultan bin Saeed al-Mansouri echoed the fund’s previous growth forecast of 4.5 per cent this year, aided by growth in non-oil sectors.
“Our non-oil economies are growing, especially the tourism and commerce sectors,” he said during the event.
Among MENA’s oil exporting countries, Qatar had the highest growth forecast for 2014 at 5.9 per cent. The fund attributed the high growth rate to large public investment programmes undertaken by Qatar to prepare itself for the FIFA 2022 World Cup and its efforts to diversify the economy.
The IMF forecast the total GDP growth of the oil exporting MENA countries to reach 3.5 per cent in 2014. Inflation among the oil exporters is also expected to be less than five per cent due to a fall in food prices, according to the report.
However, the fund also noted that falling oil revenues will lead the MENA oil exporting countries’ fiscal surplus to decline by 2.6 per cent in 2014. Large current account surpluses are also expected to decline due to lower oil revenues, the report said.
“Although fiscal positions have been weakening across the Gulf Cooperation Council (GCC) economies over the past several years, most still have substantial buffers to withstand large shocks to oil prices, provided the shocks are short lived,” the IMF said.
The Washington-based lender also urged Gulf countries to reduce their energy subsidies to curtail the rising energy consumption and free up resources for targeted social spending.
“Eliminating subsidies should be gradual and would require an effective communications strategy to broaden public support and reduce the risk of policy reversals,” it said in the report.
The growth among oil importing countries in MENA and Pakistan will range around three per cent in 2014 before rising to four per cent in 2015, the IMF added.