The UAE economy is geared to grow at an accelerated pace at 3.9 per cent in 2018, the Ministry of Economy said on Tuesday.
Citing a forecast by the UAE Central Bank, Abdullah Al Saleh, Undersecretary for Foreign Trade at the Ministry of Economy, said government investment in infrastructure projects and growth in foreign trade would spur gross domestic product (GDP) growth in 2018. He was speaking at the UAE Economic Outlook Forum.
The fifth edition of the forum, organised by Departments of Economic Development in Dubai and Abu Dhabi, focused on the role of foreign direct investment and trade in encouraging innovation and productivity.
In December, the UAE Central Bank estimated GDP growth in 2017 at only 1.6 per cent, partly because of cuts in oil output under a global deal among producers. This year, oil output is not expected to be cut further.
In October, the International Monetary Fund (IMF) projected the UAE economy would grow 3.4 per cent in 2018 while overall GCC growth is poised to rebound to 2.2 per cent.
The UAE's non-oil private sector ended 2017 on a strong note with business conditions improving at the sharpest pace in 34 months in December.
"Steep expansions in output, new orders alongside solid export demand growth underpinned the most recent upturn. In terms of inflation, input cost pressures softened during December, while selling prices fell for the fourth month running," Emirates NBD said in a recent report.
Analysts believe that while diversification will better place the UAE to entrench itself from further volatility in oil fortunes, a five per cent value-added tax introduced from January will help boost state revenues by Dh12 billion.
Ajoint report by the Institute of Chartered Accountants in England and Wales and Oxford Economics said after outpacing the rest of the GCC in economic growth in 2017, the UAE is set to almost double its expansion rate in 2018. According to the report, the UAE will record an accelerated growth in 2018 to 3.6 per cent from 1.7 per cent in 2017. The momentum will further gain pace in 2019 to post 3.6 per cent growth.
According to the IMF, while consumer price inflation in the UAE will edge up slightly from 2.1 per cent in 2017 to 2.9 per cent in 2018, the UAE will record current account balance at 2.1 per cent this year and next.
Most forecasts show that Abu Dhabi's GDP growth is expected to pick up in 2017 to 3.9 per cent and 4.7 per cent in 2018 - outpacing the overall UAE's GDP growth rates over the same period respectively.
The Institute of International Finance predicted that the UAE would continue to be the best-managed economy in the region. The UAE possesses large financial buffers - estimated at around $670 billion - on top of its safe-haven status, excellent infrastructure and a relatively diversified business-friendly economy. All these advantages will help the economy cope with the prolonged low oil price environment, the IIF said.
Garbis Iradian, chief economist at the IIF, said despite predictions of a slowdown in economic growth elsewhere in the region, the UAE's economic performance would improve in 2017 and 2018 with firming oil prices, an improvement in global trade and the expected easing pace of fiscal adjustment.