Jihad Azour, the IMF's Director for the Middle East and Central Asia, also said that despite growth, more labour reforms are needed in Saudi Arabia
Driven by strong improvement in the non-oil sector, the UAE’s economy is expected to grow to 3.4 percent in 2018 after a projected 1.3 percent growth for 2017, according to International Monetary Fund (IMF) statistics.
Speaking at the launch of the IMF’s 2017 Regional Economic Outlook, Jihad Azour, the IMF’s Director for the Middle East and Central Asia, said that the UAE’s growth has been aided by the economies of Abu Dhabi and Dubai, both of which are more than that of other their countries in the GCC.
“[In Dubai] you have investment in Expo 2020, and there is investment in infrastructure in Abu Dhabi,” he said. “Those factors are allowing those cities to grow.”
According to Azour, the IMF projects Dubai’s GDP growth at 3.5 percent, compared to 3.3 percent in 2017 and 2.9 percent in 2016.
In Abu Dhabi, GDP is projected to grow at 3.2 percent in 2018, compared to just 0.3 percent in 2017 and 2.8 percent in 2016. Azour added that the Abu Dhabi’s oil sector GDP is projected at 3.1 percent in 2018 – up from -2.7 percent in 2017 – while non-oil sector GDP is expected to rise to 3.3 percent, compared to 3.2 percent in 2017.
“The non-oil sector both in Dubai and Abu Dhabi is almost growing at the same speed, around 3 percent,” he said. “In Abu Dhabi, because of the size of the oil sector, and because of the OPEC-led agreement to reduce production, exports went down. But it will recover next year.”
In neighbouring Saudi Arabia, real GDP growth in 2017 is projected at 0.1 percent, compared to 1.7 percent in 2016. The IMF expects growth to strengthen as the company moves to implement a number of economic and social reforms designed to diversify the kingdom’s economy. The country’s non-oil sector growth is projected at 1.7 percent in 2017.
In his remarks, Azour said that Saudi Arabia’s economy will be given a boost by its decision to allow women to drive, which will improve create more jobs and opportunities.
“Allowing women to participate further in the economy will provide additional output to the economy,” he said.
Azour added “certain reforms” are required in the Saudi labour market are required to improve productivity and address unemployment, which according to IMF statistics has risen to 12.3 percent among Saudi nationals.
“The Saudi labour market is different from the UAE labour market. In the UAE labour market you have greater mobility for the expats, and this is something we are encouraging the Saudis to introduce,” he said.
“Investing in skill-building and capacity development [are] also elements that will help nationals, especially in Saudi, to enter the labour market.”
Overall, the IMF projects GCC economic growth at 3.3 percent in 2018, largely due to economic recoveries in the UAE and Saudi Arabia.