UAE on track for higher growth in 2019

Dubai - Growth projections for 2019 show that economic activity will improve in the non-oil sector

The UAE's real growth showed 3.1 per cent year-on-year increase in the third quarter of 2018, driven by both oil and non-oil sectors, according to Central Bank of the UAE's report on Tuesday.
Real oil GDP increased 2.7 per cent year-on-year basis in third quarter of 2018 while non-oil real GDP remained robust and growth stood at 3.3 per cent year-on-year basis in same quarter this year.
The central bank attributed recovery in growth momentum to federal stimulus package, measures related to granting visas to investors and professionals and increase of private credit especially to corporate sector.
 According to the Central Bank's Augmented Economic Composite Index (AECI), overall real GDP growth is projected to register 4.4 per cent in fourth quarter of 2018 supported by a 6.7 per cent growth in the oil sector, due to a production base effect and higher price levels, and a 3.4 per cent increase in the non-oil sector in the same quarter. 
Accordingly, overall real GDP growth is projected to reach 2.8 per cent in 2018 driven by a growth of 1.7 per cent and 3.3 per cent in the oil and non-oil sectors, respectively.
Furthermore, growth projections for 2019 show that economic activity will improve in the non-oil sector due to expected higher oil prices, more oil production, and the effects of the announced fiscal stimulus packages, underpinned by the strong fundamentals, the apex bank said in its quarterly report. 
 
Remittances decline
Remittances from the UAE in the third-quarter fell 4.3 per cent or Dh1.9 billion to Dh41.4 billion as compared to the same period last year. Personal remittances that were settled through the exchange houses recorded Dh32.8 billion, an increase of 5.8 per cent or Dh1.8 billion compared to the same period of 2017. While remittances sent through the banks decreased from Dh12.2 billion Q3 2017 to Dh8.6 billion in Q3 this year, a decrease of 30 per cent.
The most important destination country for outward personal remittances during the period of July-September 2018 was India, accounting for 35.7 per cent of the total outflows, followed by Pakistan, Philippines, Egypt and the UK.
Dubai property prices drop
Dubai property prices decreased 7.4 per cent year-on-year compared to the previous quarter with an average price of Dh12,804 square metre.
Quoting Reidin figures, the Central Bank said the annual drop in property prices in Abu Dhabi was 6.1 per cent as the average price reached Dh11,476 square metre. The rental yield, which measures the rate of income return over the cost associated with an investment property, decreased slightly in Dubai to 6.81 per cent, as well as in Abu Dhabi by 0.1 percentage points to reach 6.77 per cent.
"The Dubai market continues to exhibit decline in rent due to excess supply, relative to slower demand. The rent prices declined by an annual rate of 9.6% in the third quarter of 2018, following a decrease of 8.3 per cent in the previous quarter," the quarterly report said.
Inflation
Inflation rose by 3.6 per cent year-on-year in the third quarter of 2018 compared to a 3.4 per cent increase in Q2 2018. The level of inflation remained higher than in 2017 due to the effects of VAT implementation and other excise taxes on tobacco and alcohol beverages that were introduced by the end of 2017.  - waheedabbas@khaleejtimes.com