UAE to stick to economic growth forecast for now

Sultan Al Mansouri, the economy minister, said they will need to review the growth forecasts by the end of March based on the prices of oil. Silvia Razgova / The National

The UAE Government will maintain its outlook for economic growth this year, at least until the end of March, to give time for the country’s non-oil sector activity to offset the drop in oil prices, Sultan Al Mansouri, the Economy Minister, said yesterday .

Last month, Mr Al Mansouri said that growth for the Emirates was forecast to be 4.5 per cent in 2015.

The price of Brent crude has fallen 50 per cent since June to the lowest levels in more than six years on the back of higher production in the US.

The oil and gas sector contributed about 64 per cent of UAE government revenues last year.

“What we will need to do is by the end of March we will need to review that [figure for economic growth this year] based on the prices of oil,” Mr Al Mansouri said at a conference in Abu Dhabi. “Based on what is happening in the non-oil part of the economy, if we have growth in that … then maybe we can say it will stay be at 4.5 per cent. If not, then we will need to review that.”

Last week, the IMF cut its 2015 UAE growth forecast, citing the impact of lower oil prices on Abu Dhabi’s energy sector. The UAE’s economy, it said, will grow by 3.5 per cent – 1 percentage point below the IMF’s October estimate.

The lender HSBC also revised down its outlook for UAE economic growth this year. The bank now estimates growth of 3.1 per cent, down from 4.9 percent forecast last year.

“I don’t have a crystal ball to tell you that by March we will have growth at 4.5 per cent. We have to wait and see,” said Mr Al Mansouri.

He also struck an optimistic tone, saying that oil prices would eventually recover by the middle of this year.

“My expectation is by the middle of this year, we should see some positive turn in the prices of oil due to the unexpected turns in the economies of the major blocks such as the EU, US, and China,” he said.

Yesterday the energy minister Suhail Al Mazrouei said at an industry conference in the capital that the UAE would stick to its plans on infrastructure investment in the sector regardless of market prices for crude.

“Our investments are on track to make sure our standing as a major oil producer stays in the future,” he said.

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