IMF predicts steady 4% growth for UAE through to 2017

Growth in the UAE in the coming years is likely to be around half the peak of the boom years before the global downturn, forecasts the IMF.

epa02411161 Dubai Metro is seen passing in Dubai, United Arab Emirates, 24 October 2010. Dubai is forecast to emerge from recession this year with growth of 0.5 per cent thanks to recovery in the trade and tourism sectors, the International Monetary Fund has said. The IMF had previously said that the troubled emirate, which has been hit by a real-estate crash and concerns over its 110 billio USdollar in debt, would continue to contract this year. The Arab Gulf states are projected to grow at 4.5 per cent this year after anaemic growth of 0.4 per cent last year on lower oil prices, according to the IMF's regional economic outlook.  EPA/ALI HAIDER
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The UAE economy is expected to expand by an average of 4 per cent over the next six years as oil prices remain steady and private sector activity picks up, according to an IMF forecast.

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Projected growth rates fall far short of the years before the global downturn when a bloated property market and plentiful credit turbocharged the economy.

"With oil prices remaining around US$105 per barrel over the medium term, the fiscal and external accounts will remain in surplus, and real hydrocarbon growth is projected to increase to 4.5 per cent," said a new IMF report.

The main medium-term risk to the economy would come from an estimated $169.3 billion (Dh621.3bn) of debt weighing down government-related entities, it said. Debt roll-over needs remained substantial in light of restructuring ongoing, it said.

It recommended the government should limit borrowing to avoid risks to banks and government-related entities.

GDP will increase from 3.3 this year to 3.8 per cent next year, before accelerating to 4 per cent in 2013, according to the fund's baseline scenario. It would reach 4.2 per cent by 2016.

Over the same period, the role of the non-oil sector in driving the economy would increase.

tarnold@thenational.ae