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GDP to hit $474.2b in 2018

The UAE’s GDP is set to increase from the $377 billion recorded in 2012 to $474.2 billion in 2018, with net revenue in 2013 amounting to Dh488.1 billion, the International Monetary Fund (IMF) said.

In its final report after the discussions under Article IV, which took place from April 30 to May 15, 2013, the fund forecasted an increase in commodity and services exports and re-exports from $347 billion in 2012 to $542.1 billion in 2018. Non-oil exports will also increase (without including re-exports of the same) from $96.3 billion in 2012 to $193 billion in 2018.

The fund was bullish on the positive indicators of the UAE’s overall economy. It highlighted the strength in the growth of the second biggest Arab economy which has shown strong growth in tourism, stability in the real estate and is reporting rising capital inflows.

DP World employees supervise uploading of containers at the Jebel Ali Port. According to the IMF report, the UAE’s non-oil economy grew 3.5 per cent year-on-year in 2012. — AP

“The UAE’s non oil economy would expand 4.3 per cent in 2013, while the economy is likely to expand by 3.6 per cent,” the fund said.In a similar forecast, Barclays said that the economy is likely to accelerate by 3.5 per cent in the year.

“In the UAE, May PMI registered 56.1 up from 54.8 and 53.9 in April and March, respectively, highlighting strong domestic demand-driven growth,” said the Emerging Markets Quarterly, a research note issued by Barclays on June 18. The research note stated that this growth is in line with recent 2012 GDP data releases, which point to an acceleration of non-hydrocarbon.

The non-oil economy grew 3.5 per cent year-on-year in 2012 up against 2.6 per cent in 2011, said the Barclays research note, driven by the oil sector which grew by 6.2 per cent, bringing overall growth to 4.4 per cent year-on-year, higher than Barclays’ original forecast of four per cent year-on-year. Dubai grew 4.4 per cent against Barclays’ estimate of 3.8 per cent year-on-year on the back of expansion in manufacturing, strong growth in the hospitality sectors as well as in transport and logistics, which contributed one percentage point to the city’s overall growth.

In 2013, Barclays analysts expected the trade, tourism and real estate sectors to lead growth. In his remarks Obaid Humaid Al Tayer, Minister of State for Financial Affairs said the report highlighted the strengths and efficiencies of the economy. Al Tayer said the report reflects “our ability to face obstacles resulting from the financial and economic crises.”

Additionally, the minister said the IMF report presented a clear and transparent picture of the UAE’s economy, which guarantees a solid business environment. The IMF’s report highlighted the economic diversification as the non-oil sector is expected to grow 4.3 per cent in 2013, supported by the tourism, real estate, trade and wholesale sectors.

Dubai has recently announced plans for establishing large projects in both the real estate and tourism sectors, while Abu Dhabi continues to expand in activities in the energy and hydrocarbon sectors, where it depends on the economy diversification strategy, which focuses particularly on petrochemicals, renewable energy, aviation, and the tourism sectors.

In 2013, the UAE is witnessing economic revival as a direct result of rising oil prices and economic activities backed by investments, trade, tourism and logistical support, where the report predicted the GDP growth will reach 3.6 per cent and will rise to 3.7 per cent in 2014 and 3.8 per cent in 2015. The UAE expanded its production of hydrocarbons at about 5.2 per cent, and the surplus in the current balance rose to 17 per cent of GDP in 2012.

The report also indicated a rise in the Central Bank’s reserves which amounted to $47 billion for 2012. Forecasts also show that trade balance is expected to rise through achieving a surplus of 15 per cent in 2013, which will be supported by increasing oil prices, non-oil exports, trade and re-exports.

The Fund’s statistics show that the net revenue for 2011 amounted to Dh439.6 billion, which rose to Dh494.4 in 2012, and is expected to rise to Dh488.1 billion in 2013. The non oil revenues are projected to grow to Dh105 billion in 2013 from Dh98.5 billion in 2012.

— haseeb@khaleejtimes.com