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Economic Growth Rate in UAE to More Than Double

The economy in the UAE is expected to grow by 3.6 percent in 2018, up from the 1.7 percent growth the country experienced in 2017. Economists also believe the country’s GDP will continue to strengthen the following year, led by increased oil production and the growing non-oil sector.

This growth rate is stronger than most other countries in the region.

These predictions are in a joint report authored by Oxford Economics and the Institute of Chartered Accountants in England and Wales (ICAEW).

The economists who wrote the report – which is called Economic Insight: Middle East Q4 2017 – expect the UAE to continue growing through 2019 at an annual rate of 3.6 percent.

These figures are in line with other reports and predictions by various economists. The International Monetary Fund, for example, estimates the economy in the UAE will grow by 3.4 percent in 2018.

The UAE Minister of Economy, Sultan bin Saeed Al Mansouri, believes there are challenges but expects GDP to grow "on the back of a vibrant non-oil sector".

The ICAEW and Oxford Economics report also looks at other countries in the region, particularly those in the Gulf Cooperation Council (GCC). It expects GDP in the GCC region to grow by 2.8 percent in 2018, up from just 0.3 percent this year.

A significant factor in this is oil, which is still in a stage of production cuts implemented by OPEC-plus. As a result of these cuts, oil output fell by 2.3 percent in 2017 but this is expected to turn a corner in 2018 with growth anticipated to be up 1.7 percent. The widespread expectation is that oil production will return to pre-cut levels in 2019 which will see the sector grow by around 2.7 percent.

The non-oil sector continues to be a priority for most countries in the region, however, including the UAE. Jihad Azour from the IMF believes now is the right time for GCC countries to "accelerate their diversification outside oil". This includes creating conditions to let the private sector in these economies grow.

There are indications this is happening as the non-oil sector has been stronger in 2017, running at a growth rate of 2.4 percent. This is expected to expand further on the back of a range of factors in the region, including the changes currently taking place in Saudi Arabia. Those changes are on both the economic front and the political front with things like the introduction of value added tax (VAT) and letting women drive.

Economists predict growth in the non-oil sector will be 3.7 percent in 2018 and 4.7 percent in 2019.

The region does face risks, however, which could impact economic growth rates in the UAE and other countries in the GCC. Those risks are on both a political and security level.

Tom Rogers is an associate director of Oxford Economics and is an economic advisor to ICAEW. He said: “Economic growth prospects of the Middle East countries, particularly the GCC, are projected to improve in 2018 and the years after. But the political and security risks remain high and could limit or delay the recovery in the region.”

Published: 20/12/2017 11:12:43
News Category: Dubai Business

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