Sultan Bin Saeed Al Mansouri Image Credit: Supplied

Abu Dhabi: The UAE’s Minister of Economy, Sultan Al Mansouri, said he was confident about the country’s prospects for economic growth in 2017 despite challenges like lower oil prices. He expects growth rate this year to remain almost steady compared to 2016 at three per cent.

In an interview with Gulf News, Al Mansouri said his optimism was fuelled by factors that include the UAE’s economic diversification policy, which is reducing reliance on oil income. He said non-oil contributions to the Gross Domestic Product (GDP) grew by 3.6 per cent in 2016, and said that analysts are eyeing a non-oil growth rate of up to 3.8 per cent in 2017.

“With all of this … the UAE will surely come out with positive results of a clear future, further raising the attractiveness of the UAE’s business environment. This is also likely to result in GDP growth of 3 per cent in 2017, complementing the International Monetary Fund’s prediction of a growth rate of 3.3 per cent, up from 3.1 per cent at the end of 2016,” the Minister said via email.

He also pointed factors such as improving national competencies to strengthen non-oil sectors, and consolidating the UAE’s economic relations at regional and international levels to boost trade and investment.

Discussing trade, Al Mansouri said Asian and African economies are key markets for the UAE particularly in the area of re-exports, whose contributions to the UAE economy is expected to increase.

Challenges expected

Despite his optimism, the Minister said he expected some economic challenges in 2017.

“We foresee a few challenges that the country will be facing this year like the drop in oil prices, which still casts a shadow over the economies of oil exporting countries like the UAE. One aspect to this challenge is the difficultly in predicting the change in oil prices, and the possibility of returning to previous oil prices,” he said.

Al Mansouri added that the difficulty in determining the amount of oil income by the end of the year represents a “vast slide in the general revenues of the state, and will also result in a national budget deficit — demonstrating either a growth or decline.”

“As a result, the UAE should urge for the adoption of prudent fiscal and economic policies that will strengthen the capacity of the national economy to withstand the pressures, and maintain financial and monetary stability, and push for sustainable growth,” he said.

Economic strategy

Discussing the Ministry of Economy’s strategy for 2017, Al Mansouri said it will focus on promoting investment spending on strategic projects that add economic value. Another key sector the Ministry plans to focus on this year is science, technology and innovation, which is composed of over 100 initiatives worth more than Dh300 billion.

“The Ministry’s plans and efforts to consolidate economic diversification are based on the need to reduce dependence on oil revenues and to find other sources of income from non-oil sectors of the economy,” the Minister said.

He added that the Ministry will also continue to focus on strengthening the Small and Medium Enterprise (SME) sector by increasing the incentives and benefits provided to SME owners.

The Ministry is currently in negotiations with many countries around the world to sign agreements that provide benefits for UAE-based SMEs. Such benefits will include easier access to foreign markets and increasing the export potential of the SMEs’ products and services.

“All of these factors open up broad prospects for the development of the enterprise sector, especially SMEs that are oriented towards enterprise innovation, technology, and knowledge economies.

Overall, the proportion of SMEs in the UAE is estimated to contribute to more than 60 per cent of the country’s GDP. The target set by the National Key Performance Indicators is that the ratio [will reach] up to 70 per cent by 2021,” Al Mansouri said.