The International Monetary Fund has lowered its growth projection for the UAE in 2015, citing lower oil production as reason.
Last October, the IMF projected that the UAE’s economy would grow by 4.5 percent in 2015, based on a higher level of oil production and demand.
Speaking at a press conference on the Middle East and Central Asia 2015 Economic Outlook, Masood Ahmed, the IMF’s Middle East and Central Asia department director, said: “Our current projections on UAE for this year, 2015, are at 3.5 percent overall, and it will be 3.5 percent also for next year”.
Ahmed said growth in the economies of Abu Dhabi and Dubai would perform differently over the coming year, with Dubai expected to grow by 4.5 percent this year and 4.6 next year.
“The number for Abu Dhabi for this year is three percent and for next year is also about three percent. But it's important to say that the reason why the number for Abu Dhabi is lower than we were projecting is because oil production is lower, so because the demand for oil is lower,” said Ahmed.
“If you look at the non-oil part of the economy for Abu Dhabi, which is the part that most directly affects economic activity and employment, that is growing at over five and a half percent this year and next year, so the oil part is lower.
“That brings down the aggregate number for Abu Dhabi to about three percent but the non-oil part of the economy for Abu Dhabi is growing at over five and a half [percent],” he added.
He said the impact of the oil price plunge on the UAE economy would see the country “run a fiscal deficit this year of around three and a half percent of GDP”, but expected a budget surplus by 2017.
“With continued gradual fiscal adjustment and the expected recovery in oil prices in line with futures markets … we project that the UAE could begin posting budget surpluses again from 2017.
“So 2015 and 2016 is likely to run a deficit and after that it could start running a surplus. I should also say that the UAE has large buffers in the form of foreign assets which imply that financing of these deficits is not going to be an issue for them,” said Ahmed.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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