World Bank report sees economy strengthening in the run-up to Expo 2020
Real GDP growth in the UAE is estimated to further moderate to 1.4 percent this year, down from 3 percent in 2016, according to the World Bank.
Its UAE Economic Outlook - October 2017 report said hydrocarbon GDP growth is estimated to contract to 2.9 percent in 2017 from 3.8 percent last year in compliance with the OPEC agreement to cut supply.
The research added that the UAE's non-oil sector is estimated to grow by 3.3 percent in 2017, reflecting higher public investment and a pickup in global trade.
"In the medium term, firmer oil prices, a rebound in global trade and easing of fiscal consolidation are expected to strengthen economic activity, especially as investments ramp up ahead of Dubai’s Expo 2020," said the World Bank which cautioned that this rebound is faced with several downside risks, including lower oil prices and tighter global financial conditions.
The report noted that the average rate of inflation increased slightly to 2.2 percent in 2017 from 1.6 percent in 2016 partly reflecting utility and gasoline price adjustments, and higher imported inflation, in addition to an uptick in activity.
The current account surplus is expected to improve to 2.6 percent of GDP this year mainly owing to rising non-oil exports, it added.
The World Bank said fiscal consolidation efforts in the UAE - including an increase in electricity and water tariffs and the removal of fuel subsidies - had so far failed to stop the country's consolidated fiscal balance move from a surplus of 10.4 percent of GDP in 2013 to a 4.3 percent deficit in 2016.
However, it added that the addition of increased parking fees in Dubai, fees for hotels and airport passengers, a 4 percent municipality fee on hotel bills and a 3 percent municipality fee in Abu Dhabi is expected to improve the fiscal deficit slightly to 3.2 percent of GDP in 2017.