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Survey from IMA and the Association of Chartered Accountants suggests optimism is at its highest in three years
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1. Rise in the price of oil: A key catalyst in the economic recovery in the region in the last 12 months has been the rebounding oil price. From the lows of just $35 at the beginning of 2016, the recent average of $75 per barrel has helped drive up revenues in every GCC country. As an illustration, GDP growth in the UAE slowed from 4.6 percent in 2014 to 1.1 percent in 2016. It will rebound to 2.5 percent in 2018.
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2. Fiscal policy: The climb in oil prices has also seen an end to fiscal austerity measures in countries like Saudi Arabia and public-sector price rises – by as much as 10 percent in the case of Sharjah – which have both had a major knock-on effect in terms of disposable income. The wage rises have helped offset the slight inflationary impact that accompanied the imposition of VAT this year.
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3. Infrastructure boom: As government revenues climb, so large development projects associated with Expo 2020 and UAE Vision 2021 accelerate. “The report shows that government spending is at a multi-year high and this is particularly focused on diversifying regional economies and driving sustainable economic development,” said Hanadi Khalife, IMA’s director for MEA and India operations.