IMF lowers UAE’s 2017, 2018 growth forecasts

The International Monetary Fund (IMF) lowered its 2017 and 2018 growth forecasts for the United Arab Emirates, noting the impact of weak oil prices.

In July, the IMF revised its estimates for overall growth for UAE’s economy to 1.3 percent from 1.5 percent predicted in April.

The 2018 growth forecast slipped to 3.4 percent from the 4.4 percent projected in the previous report.

The country’s non-oil growth for 2017 is expected to be 3.3 percent – increasing from 2.7 in 2016, but down from IMF’s previous estimate of 3.8 percent.

Real oil GDP growth is estimated to contract by 2.9 percent as a result of the UAE’s commitment to the OPEC agreement, but is projected to recover in 2018 and return to a rising trend over the medium term, the Fund said.

The introduction of a 5 percent value-added tax rate in 2018 was not expected to have “a significant adverse impact on growth,” the IMF added.

“Growth is projected to recover over the next few years, as the pace of the necessary fiscal consolidation eases, global trade regains momentum, and investment, including for Expo 2020, accelerates.”

The outlook faces downside risks mainly from a further sustained decline in oil prices, tighter financial conditions, a rise in protectionism and an intensification of regional conflicts, the report added.