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28 March 2024

Ernst & Young raises UAE's growth forecast

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By Staff

Multinational professional services firm Ernst & Young has raised UAE’s medium term growth forecast and projected 4.1 per cent growth for this year.

According to Ernst & Young’s Rapid-Growth Markets (RGM) Forecast report released on Monday, economic growth in the UAE is set to increase by an average of 4.3 per cent over the next four years, largely attributed to Dubai's successful bid to host the World Expo 2020.

Earlier this month, the International Monetary Fund (IMF) raised its growth forecast for UAE on the back of rising real estate prices and Dubai’s World Expo 2020 win. IMF said the UAE is likely to grow 4.4 per cent this year compared to 3.9 per cent growth it projected in October last year.

Ernst & Young said confidence remains high in the UAE and Ernst & Young has upgraded its growth forecast for the country in the medium term. Though the benefits of hosting the event will be concentrated mainly in Dubai, Ernst & Young predicts ancillary growth in other Emirates as a result. The successful bid is predicted to stimulate growth in the non-oil sector, including increased spending on construction, tourism and hospitality.
 

GCC growth robust

It said growth remains robust across the GCC with Qatar's economy is predicted to grow by 6.0 per cent and Saudi Arabia by 4.3 per cent this year.

Bassam Hage, Mena Markets Leader at EY, said: "Economic growth across the GCC remains robust, with the region re-emerging as an influential global hub for trade between Asia, Europe, Africa and North America. The key challenge for the GCC remains continuing to diversify its economies and invest in its growing non-oil sectors."

In Saudi Arabia, GDP is expected to grow by 4.3 per cent in 2014 and 2015, with non-oil growth expected to average 4.7 per cent across 2014-2017. While this reflects a slight slowdown from the 2010-2012 period, growth remains strong in the non-oil sector and will continue to support Saudi Arabia in diversifying its economy.

The economic outlook in Qatar also remains positive, with growth set to increase by an average of 6.0 per cent across 2014 to 2017. Growth in the non-oil sector in particular is predicted to increase in excess of 10 per cent this year and a rapidly expanding population continues to boost domestic consumption. This growth has been largely generated by infrastructure funding which is set to drive spending on tourism, hospitality, and construction. Major infrastructure projects include the Doha metro and Hamad International Airport.

"Emerging markets remain center stage both for the potential they offer and the challenges they pose. Businesses and governments are taking a fresh look at opportunities that can shape the future of their markets and people. Businesses seeking to establish, expand or maintain interests in emerging markets, should raise their sights to the longer term, and the serious prospect that their global position will be determined by these markets," Bassam said.