The UAE’s economic growth will top 3.5 per cent this year as the non-oil sector continues to expand despite the oil price slump, says Sultan Al Mansouri, the Minister of Economy.
National GDP will rise to Dh1.6 trillion this year from Dh1.5tn last year, according to a statement yesterday from the minister.
The UAE was able to maintain its economic growth because of its diversification policy and increased reliance on the non-oil sector, said Mr Al Mansouri.
The industrial sector, for example, contributes between 10 and 14 per cent of GDP.
Industrial investments in the UAE would double in five years, said the minister.
The ministry, he said, was also working on strengthening the economy’s competitiveness by boosting foreign direct investment flows and improving economic ties with other countries.
The IMF has forecast UAE economic growth of 3 per cent this year, down from 4.6 per cent last year, as the oil slump results in weaker real estate and corporate activities.
The price of the benchmark Brent crude has plunged about 50 per cent this year to under US$50 per barrel because of the supply glut and weaker demand in Asia. A strong US dollar has also weighed on oil prices.
The IMF also said that government spending cuts would affect economic growth in the UAE. It expects the country’s non-oil GDP to grow 3.4 per cent this year, versus 2 per cent for the oil sector.
Standard Chartered projects the UAE’s GDP growth at between 3.5 and 4 per cent this year, but Standard and Poor’s expects growth of just 2 per cent.
The UAE is expected to post a fiscal deficit of 2.9 per cent of GDP this year, as the oil price collapse is hurting the country’s main source of income, according to IMF estimates.
The IMF had forecast in January that tumbling oil prices would drain Arabian Gulf countries’ exports by US$300 billion this year, or a fifth of their economy.
* With additional reporting by Wam
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