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|09 January, 2019

UAE to be fastest growing GCC economy in 2019: IIF

UAE's real GDP to grow 3.1 per cent in 2019 compared to 2.9 per cent estimated for 2018

Image used for illustrative purpose. Dubai, United Arab Emirates

Image used for illustrative purpose. Dubai, United Arab Emirates

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The UAE will be the fastest growing economy in the GCC region this year along with Oman, driven by non-oil sector, Dh50 billion Abu Dhabi stimulus package and projects linked to Expo 2020 Dubai, according to a new report released on Wednesday.

The Institute of International Finance (IIF) analysts projected the UAE's real GDP to grow 3.1 per cent in 2019 compared to 2.9 per cent estimated for 2018. But growth is projected to slow down to 2.7 per cent in 2020. Nominal GDP is estimated to increase from $434 billion (Dh1.592 trillion) in 2018 to $444 billion (Dh1.629 trillion) in 2019 and $458 billion (Dh1.681 trillion) in 2020.

Taimur Khan, Research Manager, Knight Frank, said in an another UAE research that outlook for the UAE's GDP growth in 2018 and 2019 remains positive on the back of higher oil prices, a range of stimulus packages and easing of business regulations in both Abu Dhabi and Dubai, which are likely to support activity in both the public and private sectors.

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International Monetary Fund had predicted 3.7 per cent growth for the UAE for 2019 in its October forecast. While World Bank on Tuesday predicted 2 per cent in 2018 which is expected to accelerate to 3.0 per cent in 2019 and 3.2 per cent in 2020 and 2021.

According to IIF forecast, Oman's real GDP growth is also projected at par with the UAE at 3.1 per cent for this year and 3.4 per cent in 2020. While Saudi Arabia's real GDP is predicted to grow 2 per cent in 2019, Kuwait at 0.4 per cent, Qatar at 2 per cent and Bahrain at 2.4 per cent.

"Consumer inflation will ease in 2019 in Saudi Arabia and the UAE after the VAT related spike in 2018. Downward pressure from the low rental prices will persist," IIF analysts said.

In 2018, higher oil prices enabled temporary improvements in the external and fiscal positions of the GCC countries.

"We see the aggregate current account surplus declining from $153 billion in 2018 to $86 billion in 2019 due to lower oil prices and export volumes. We also expect the aggregated fiscal deficit to widen again from 1.4 per cent of GDP in 2018 to around 4.0 per cent in 2019 and 2020, and the public debt to rise to 45 per cent of GDP by 2020," said Garbis Iradian, chief economist, Mena, IIF.

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