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
