UAE economy to grow by Dh87 billion to Dh1.61 trillion in 2015

The UAE economy is expected to grow at a faster clip in the second half of this year while the overall size of the economy is forecast to expand by nearly 5.7 per cent or Dh87 billion ($23.74bn) in 2015 – thanks to heightened non-oil private sector performance and greater public sector spending.

According to global consulting firm Frost & Sullivan, the size of the UAE economy based on its GDP is estimated to grow from $416.44bn (Dh1.528 trillion) last year to $440.18bn (Dh1.615 trillion) this year, thanks to its economic diversification, increased public sector spending and huge foreign reserves.

Data from HSBC’s Purchasing Managers’ Index (PMI) for the month of May showed that the UAE's non-oil private sector continued to record ‘robust growth’ – shrugging off oil price decline. The output sub-index rose to 62.8 points last month from 62 points in April, growing at the fastest rate in the last three months.

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Frost & Sullivan predicts growth of 4.4 per cent growth for 2015 as compared to 4.3 last year. During the second half pf the year, it forecasts growth of 4.5 per cent. This is in line with the International Monetary Fund’s (IMF) forecast released in May 2015, predicting UAE’s non-oil GDP growth at 4.4 per cent this year and 4.5 per cent for the next.

“Diversification of the UAE economy has made it less vulnerable to oil price fluctuations, and heightened non-oil private sector performance will be the key factor that drives economic growth to approximately 4.5 per cent in H2 2015,” said Frost & Sullivan Emerging Market Innovation Senior Research Analyst Krishanu Banerjee.

“Along with increased non-oil activities, greater public sector spending and a large amount of foreign reserves will contribute to the country's economic well-being,” he added.

Banerjee anticipated that the Middle Eastern economies will witness around 5 per cent growth this year due to the gradual shift in investment to non-oil sectors.
 

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