Central bank upgrades UAE's GDP growth view on oil sector
The improved outlook for the UAE's growth is due to expected rising public and private spending at the federal and emirate levels.
Dubai - 2.4% expansion now seen against 2% initially forecast in Q1
The Central Bank of the UAE has revised the country's growth forecast upward for 2019 following strong growth in the first-quarter of this year, led by the oil sector.
The Second-quarter Economic Review released on Sunday showed that GDP is projected to grow 2.4 per cent in 2019 as compared to the 2 per cent forecast in the first quarter.
The economy expanded 3.7 per cent in the first-quarter compared to 2.2 per cent in the previous report, thanks to faster growth in the oil sector, which is expected to grow 5 per cent this year compared to 2.7 per cent issued in the first-quarter report.
Non-oil sector growth, meanwhile, is forecast to grow 1.4 per cent this year against 1.3 per cent in 2018.
"Improved outlook for growth is due to expected rising public and private spending at the federal and emirate levels, higher investment ahead of the highly-anticipated Expo 2020 and continued regional economic recovery, in light of the monetary policy easing in the US," the central bank said.
"On the other hand, the oil sector is expected to grow, notwithstanding current output levels, benefiting from the Adnoc initiative of investing in value-added goods and services by more than Dh400 billion over five years."
The Institute of International Finance (IIF) earlier this month predicted 2.1 per cent growth for the UAE this year and 1.9 per cent for 2020.
"We expect non-hydrocarbon real GDP growth to pick up to 1.9 per cent in 2019 and 2.2 per cent in 2020, supported by Abu Dhabi's three-year stimulus package and Dubai's spending linked to Expo 2020," said Garbis Iradian, chief economist for Mena at the IIF.
"Growth could ease to less than 2 per cent beyond 2020 as the impact of Abu Dhabi stimulus and Expo 2020 fades. To achieve higher non-hydrocarbon growth over the medium term, deeper reforms are needed to raise total factor productivity growth to 1.5 percentage points."