The UAE economy, resilient to global and regional headwinds, has been on a steady rebound in 2017, despite predictions of a slowdown in economic growth elsewhere in the region.
Economists and analysts predict that the UAE - marking its 46th year as one of the fastest-growing economies in the world - is set to almost double its expansion rate in 2018.
The Institute of International Finance (IIF) affirms that the UAE is on track to be one of the best performers among the Middle East and North African economies over the next five years as its vibrant growth continues to be driven by trade and tourism.
"The UAE continues to be the best-managed economy in the region. It possesses large financial buffers - estimated at around $670 billion, safe-haven status, excellent infrastructure and a relatively diversified business-friendly economy, which will help the economy cope with the prolonged low oil price environment," says Garbis Iradian, chief economist for the Washington-based IIF.
Riding a wave of diversification, particularly into tourism, non-hydrocarbon trade, and financial services, the economy is better-positioned than its peers to continue to mitigate the adverse impact of low oil prices. Hydrocarbon GDP accounts for only 30 percent of total GDP and oil exports for slightly less than 40 percent of total exports.
The International Monetary Fund said in its latest outlook for the UAE that better days are ahead for the country with the economy right on track for a rebound with a 3.4 percent surge in 2018.
"We expect non-oil real GDP growth to accelerate to three percent in 2017 and 3.5 percent in 2018, supported by investment and non-oil exports of goods and services. Several high-frequency economic indicators, including the Purchasing Managers' Index [PMI], retail sales and number of tourist arrivals over the first nine months of 2017, suggest improvement in sentiment and private sector activity," said the IIF.
Banks in the UAE are well-regulated and supervised and continue to weather the effects of low oil prices and the moderation in non-oil economic activity. Most analysts expect annual credit growth to recover from 1.7 percent at end-2017 to about five percent in 2018.
Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said that the outlook for the economy is brightening despite regional and global macroeconomic challenges.
"With two years into Expo 2020 Dubai, the economic growth momentum is expected to pick up on the back of a vibrant non-oil sector as the country remains on track to establish a diverse knowledge- and innovation-driven economy," Al Mansouri said.
The World Bank official, however, stressed the need for the private sector to drive most of the economic growth, and private-public-partnership models will be very important in securing that. He believes that the privatization drive will help prop up the capital markets.
In the most recent edition of the Global Competitiveness Report 2017-18, issued by the World Economic Forum, the UAE topped the Arab world and ranked 17th globally in the global competitiveness ranking. The report also ranked the UAE among the top 20 competitive economies globally for the fifth consecutive year. The country also maintained its ranking to be among the world's most significant innovation-based economies for the 11th successive year.