The World Bank said on Wednesday that it had slashed its growth expectations for the UAE by 1.1 percentage points to 2 per cent for 2016 as oil prices remain low and governments cut back on spending.
That comes after an estimated 3.4 per cent growth in 2015 for the UAE.
The global lending institution said that while oil-dependent Arabian Gulf nations had made moves to raise cash to make up for the budgetary shortfalls, that such efforts would not completely plug the gap.
“Modest efforts to expand revenue have also been implemented, including raising corporate and consumption taxes, but in the short term will not make up for large revenue losses in 2015 from plummeting oil prices,” the bank’s report on the world economy stated.
“Increasingly, governments will rely on domestic and international debt issuance to finance deficits.”
Elsewhere in the Arabian Gulf and the wider Middle East, the World Bank reduced its forecast for growth for similar reasons but as a whole said the region’s economic growth in 2016 was likely to rise to 2.9 per cent from 2.6 per cent in 2015 on improving prospects of economic growth in Iran amid easing of sanctions against the Islamic Republic.
The World Bank also downgraded its expectations for global growth to 2.4 per cent from 2.9 per cent in 2016 amid sluggish growth in the developed world and low commodity prices holding back prospects in the emerging world.
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