UAE's non-oil GDP to grow at 4.4% in 2015: IMF

The International Monetary Fund (IMF) has revised the UAE’s growth outlook for this year and the next to 3.2 per cent.

The UAE’s non-oil GDP is now forecast to grow at 4.4 per cent this year and the IMF said it is likely to move up to 4.5 per cent in 2016, it said in its latest regional outlook report.

“The non-oil economy is projected to expand by over 4 per cent per annum in the coming years on the back of Dubai’s strong core services sectors and Abu Dhabi’s diversification efforts,” it said.

The IMF lowered inflation forecast for 2015 to 2.1 per cent from 2.3 per cent in the previous year. It, however, revised upward inflation again for the next year to 2.3 per cent.

Between July 2014 and April 2015, oil prices dropped by 50 per cent. They are now expected to be $58 per barrel in 2015 before rising gradually to $74 per barrel by 2020, in response to a decline in oil investment and production and a pickup in oil demand as the global recovery strengthens.

World Bank said earlier in its Mena Economic Indicator report that the UAE’s real GDP growth is forecast to slow from 4.7 per cent in 2014 to 3.1 per cent this year due to a decline in oil prices.

The IMF said the UAE’s GDP grew 3.6 per cent while non-oil GDP registered a growth of 5.2 per cent in 2014.

Across the GCC countries, GDP growth is forecast at 3.4 per cent in 2015, revised downward since last October by 1 percentage point, mainly because of a slowdown in non-oil growth in response to lower oil prices.

In terms of the UAE’s nominal GDP, IMF sees it dropping by Dh139 billion to $363.7 billion (Dh1.334 trillion) this year from $401.6 billion (Dh1.473 trillion) in the previous year. It’s expected to increase to $392.1 billion (Dh1.439 trillion) next year.

It predicted current account balance dropping from 12.1 per cent of GDP in 2014 to 5.3 per cent this year but rising to 7.2 per cent in 2016.

In the Gulf region, inflation is expected to decline by half a percentage point to just above 2 per cent because of strengthening currencies – which are pegged to the US dollar – and declining food prices. Lower oil prices are unlikely to affect inflation significantly, because most countries use administered prices for fuel products.

In Saudi Arabia, the growth forecast for 2015 is now 3 per cent, down 1.5 percentage points from last October, although half of this revision owes to the rebasing of real GDP data.

Under the current oil price assumptions, the Fund said fall in anticipated oil export earnings in 2015 is $287 billion (21 per cent of GDP) in the GCC and $90 billion (11 per cent of GDP) in the non-GCC countries. The oil price decline will turn the long-standing current account surplus of oil exporters in the Middle East, North Africa and Pakistan region (Menap) into a deficit of $22 billion (1 per cent of GDP) in 2015.

According to IMF, growth in Menap oil exporters reached 2.4 per cent in 2014, slightly higher than in 2013, and mainly reflecting recovery in Iran and a pick-up in oil-related activity in Saudi Arabia. In 2015, growth is projected to remain unchanged, before rising to 3-and-half per cent in 2016 as oil growth accelerates in Iraq and Libya.

In the GCC, a combined budget surplus for 2014 of $76 billion (4.5 per cent of GDP) is expected to turn into deficit of $113 billion (8 per cent of GDP) in 2015, IMF said in latest regional outlook report.

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