Mubasher: The UAE is adapting to the new realities in the oil markets, backed by its large financial buffers and diversified economy, according to Natalia Tamirisa, who led the International Monetary Fund's (IMF) mission to the UAE from 30 April to 14 May for the annual Article IV discussions.
Non-oil growth is expected to rise to 3.3% in 2017, reflecting higher Expo 2020 investment, more gradual fiscal consolidation, and stronger global trade, a statement by the IMF said.
Similarly, oil GDP is likely to decline by 2.9% on the back of agreed OPEC cuts in oil production.
Overall growth will ease to around 1.3% this year, before recovering to above 3% over the medium-term, while average inflation is projected to go up to 2.2% in 2017.
The government’s budget deficit is expected to decline to 4.5% of GDP and the current account surplus to improve to 2.4% of GDP in 2017.
“A timely introduction of the VAT and excises would diversify government revenues,” the IMF added.
“A stronger fiscal policy framework supported by better fiscal data would facilitate decision-making and help align governments and GRE spending more closely with the National Agenda’s goals of raising productivity and diversifying future sources of growth,” the statement added.
“Banks’ liquidity and capital buffers are helping them cope with lower oil prices," according to Tamirisa.
