IMF praises UAE’s economic resilience

The country's economic diversification strategy plays a vital role in enhancing the efficiency of the private sector, says Jihad Azour

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The strong performance of the UAE's non-oil sector has significantly contributed to the country's economic resilience.

Published: Thu 15 Feb 2024, 5:07 PM

Last updated: Thu 15 Feb 2024, 5:08 PM

The International Monetary Fund has praised the UAE's robust economic performance in recent years and highlighted its exceptional handling of global challenges.

Jihad Azour, director of the IMF’s Middle East and Central Asia Department, said the UAE's economic diversification strategy has played a vital role in enhancing the efficiency of the private sector. The strong performance of the UAE's non-oil sector has significantly contributed to the country's economic resilience.

“The performance of the UAE economy has been very good, achieving the best growth rates compared to other economies in the region, exceeding 4.0 per cent," Azour said at the World Governments Summit (WGS).

On the significance of WGS talks, Azour underscored the Washington-based fund’s strategic partnership with the event. In a statement to Wam, he referred to the "Annual Arab Fiscal Forum" held in collaboration with the Arab Monetary Fund, where discussions on financial and economic prospects in the region take place among Arab finance ministers and central bank governors.

Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund, during an interview in Dubai. — Reuters file

On the outlook for the economies of the Middle East region, Azour noted a downward revision in forecasts for 2024 by 0.5 percentage points due to geopolitical tensions and temporary reductions in oil production.

The IMF expects the Middle East and Central Asia economies to grow by 2.9 per cent in 2024, lagging below October projections, due in part to short term oil production cuts and the conflict in Gaza. For 2025, it projected 4.2 per cent growth. The Fund has raised its expectations for global economic growth to 3.1 per cent in 2024 and 3.2 per cent in 2025, upgrading the outlook for both the United States and China and citing faster-than-expected easing of inflation

Azour predicted uneven growth for the region's economies in 2024, and projected that non-oil growth would remain strong. He pointed out positive signs amid expectations of a decrease in global inflation rates in 2024.

Azour’s remarks came on the heels of remarks made by IMF Managing Director Kristalina Georgieva at the Arab Fiscal Forum in Dubai on Sunday. She said the Middle East economies were lagging below growth projections due to oil production cuts and the Israel-Gaza conflict, even as the global economic outlook remained resilient.

Despite uncertainties, "the global economy has been surprisingly resilient," Georgieva said, while warning of a potential wider impact on regional economies of continued conflict in Gaza.

She said economies neighboring Israel and the Palestinian territories saw the conflict weighing on tourism revenues, while Red Sea attacks weighed on freight costs globally.

The IMF published on Monday a paper that shows phasing out energy subsidies could save $336 billion in the Middle East, equivalent to the economies of Iraq and Libya combined, Georgieva said.

Georgieva said that eliminating regressive energy subsidies also "discourages pollution, and helps improve social spending."

In the Middle East and North Africa region, fossil fuel subsidies made up 19 per cent of GDP in 2022, the IMF has said.