The Central Bank of the UAE raised its economic growth forecast for 2018 to 2.7 per cent from its previous projection of 2.5 per cent thanks to an expected expansion in the non-oil sector despite slower year-on-year growth in the first quarter.
There is an improvement in the growth projections of non-oil gross domestic product (GDP), "due to improved international economic conditions,” the central bank said in a first quarter economic report published Tuesday on its website. “In parallel, the projected oil output is lower for 2018, based on the first three months’ realisation in the current year, which has impacted negatively oil GDP, and hence overall GDP growth in 2018.”
Non-oil GDP growth is forecast to rise to 3.9 per cent this year compared with 3.4 per cent last year.
Growth in the first quarter reached 1.21 per cent in the first quarter, slower than 3.01 per cent recorded in a year-earlier period, but higher than 0.06 per cent expansion in the fourth quarter. GDP growth, which reached 1.5 per cent in 2017 from 2.7 per cent a year earlier, was affected by slower non-oil expansion due to the UAE’s compliance as an Opec member with global oil output curbs that started in January last year and were extended till the end of 2018.
Non-oil GDP in the first quarter was driven by higher global growth, improvement in private credit growth and the depreciation of the dirham amid a weak dollar to which the currency is pegged, which boosted the country’s competitiveness.
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“The non-hydrocarbon sector in the UAE grew by 3.1 per cent in the first quarter of 2018, driven mainly by continued improvement in global economic conditions and the positive economic sentiment triggered by higher oil prices, increasing fiscal space for priority spending in the near future,” the report said.
The United States is growing faster than other developed markets, particularly Japan and the eurozone and the dollar has surged more than 5 per cent since mid-April, its biggest rally since late 2015. The dollar rally has coincided also with a surge in oil prices, which touched $80 a barrel earlier this month.
For 2019, the central bank is projecting the economy to accelerate 3.1 per cent, driven by non-oil GDP expansion of 4.3 per cent and oil GDP expansion of 0.1 per cent. This compares with oil GDP contraction of 0.3 per cent in 2018 versus 3.9 per cent growth in non-oil GDP.
Higher oil prices and non-oil growth fuelled by increased government spending are expected to help boost UAE growth to 2 per cent in 2018 and 3.6 per cent 2019, according to International Monetary Fund estimates.
The central bank’s estimates are in line with projections from Oxford Economics.
“We expect the UAE economy to grow by 2.6 per cent this year, driven by higher government spending at the federal and emirate levels, rising oil prices, a buoyant trade and tourism environment and a pick-up in investment ahead of Expo 2020 in Dubai,” said Mohamed Bardastani, senior Middle East economist at Oxford Economics.
“Our projection for 2019 is similarly positive, as we expect growth to accelerate to 3.2 per cent, assuming the normalisation of oil production level by the UAE.”
As for inflation, the central bank is projecting consumer prices to moderate to 3.5 per cent this year and 2.5 per cent next year. Inflation increased to 4.2 per cent in the first quarter compared with 1.8 per cent in the fourth quarter due to the introduction of 5 per cent VAT and higher fuel prices.
Separately, the UAE’s current account surplus increased to Dh97.1 billion in 2017 or 6.9 per cent of GDP, compared with Dh48.5bn or 3.7 per cent of GDP in 2016, the central bank said in a report released on Monday.
“The increase of surplus in 2017 is attributed to the increase in the trade balance associated mainly with the oil price evolution and improvement in economic activity,” the report said. “The increase in the trade balance surplus was accompanied with increase in the surplus of the investment income and was complemented with narrower deficit in the services balance despite the wider deficit of transfers.”
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
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1.45pm: Maiden Dh75,000 1,200m.
2.15pm: Maiden Dh75,000 1,200m.
2.45pm: Handicap Dh95,000 1,200m.
3.15pm: Handicap Dh120,000 1,400m.
3.45pm: Handicap Dh80,000 1,400m.
4.15pm: Handicap Dh90,000 1,800m.
4.45pm: Handicap Dh80,000 1,950m.
The National selections:
1.45pm: Galaxy Road – So Hi Speed
2.15pm: Majestic Thunder – Daltrey
2.45pm: Call To War – Taamol
3.15pm: Eqtiraan - Bochart
3.45pm: Kidd Malibu – Initial
4.15pm: Arroway – Arch Gold
4.35pm: Compliance - Muqaatil
Jetour T1 specs
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Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
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Starring: Mila Kunis, Kathryn Hahn, Kristen Bell, Susan Sarandon, Christine Baranski, Cheryl Hines
Two stars