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.

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. EPA/ALI HAIDER

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.