UAE Image Credit: File photo

Abu Dhabi: Growth in the UAE is forecast at 2.6 per cent in 2019, jumping to 3 per cent in 2020 as the country pushes infrastructure investments ahead of Dubai’s Expo 2020, according to the new report issued by the World Bank on Wednesday in Abu Dhabi.

The report also said economic growth in Gulf Cooperation Council (GCC) is expected to increase from 2 per cent last year to 2.1 per cent in 2019, before accelerating to 3.2 per cent in 2020 and stabilising at 2.7 per cent in 2021.

In the UAE, growth is forecast to reach 3.2 per cent by 2021 supported by the government’s economic stimulus plans, hosting Expo 2020 and improved growth prospects in trading partners.

The figures from the World Bank are almost similar to the economic growth projections made by the International Monetary Fund (IMF) earlier this week. For 2019, the IMF’s Regional Economic Outlook has projected 2.8 per cent real GDP growth and 3.3 per cent for 2020 in the UAE. In GCC countries, GDP growth is expected to improve slightly to 2.1 per cent in 2019.

The report said the GCC countries have made steady progress in implementing major reforms to attract investors and boost competitiveness, such as easing business licences, lowering fees, liberalising foreign ownership, and supporting women and young entrepreneurs.

“Much has been done in recent years to attract investments, especially in non-hydrocarbon sectors, and to encourage non-oil exports, such as reforming legislation and creating free trade zones with generous incentives for investors. But FDI [foreign direct investment] inflows to the region have under-performed that of other emerging markets,” the report said.

The remaining agenda includes loosening foreign ownership of firms and reducing non-tariff barriers, in addition to business environment reforms, is already receiving high priority in many countries, the World Bank report added.

As per the report, FDI inflows into the region have underperformed that of other emerging markets and developing countries.

FDI inflows into the GCC countries stalled in recent years, remaining below 2 per cent of regional GDP in years from 2012 to 2017 with Saudi Arabia and the UAE attracting 80 per cent of the total foreign direct investment.

“GCC governments have demonstrated strong political will for reforms, but economic transformation is a long term endeavour requiring steadfast, predictable implementation and the road ahead is difficult,” said Essam Abu Sulaiman, World Bank regional director for the GCC.

“As the fourth edition of the World Bank’s Gulf Economic Monitor highlights, GCC countries must pursue their national reform agendas with patience and perseverance with complementary attention to institution building and capacity development.”

The report highlighted slowdown of global growth, resumption of monetary policy tightening and slowdown in the pace of reforms as some of the risks and long term challenges facing the region.

The World Bank report also called for accelerating human capital formation by adopting a holistic governmental strategy to improving health and education outcomes.

The report was released at Abu Dhabi Global Market building in the presence of senior officials from the World Bank as well as from the ministry of finance and the financial centre.

Saudi Arabia growth at 1.7 per cent in 2019

For Saudi Arabia, growth is expected to slow moderately to 1.7 per cent in 2019, as higher government spending offsets the impact of oil production cuts implemented in the first half of 2019.

It should then recover to over 3 per cent in 2020 as oil production cuts are reversed, and as large infrastructure projects generate positive spillovers to private sector growth, the World Bank report added.

Oil prices to hover around $66 per barrel

Oil prices are expected to hover around $66 per barrel in the period from 2019 to 2021, compared to a previously forecast of $72 to $74 per barrel in November 2018, World Report said on Wednesday.

“The outlook on oil supply depends to a large extent on production decisions by the Opec and their non-Opec partners, which have freshly agreed to cut output by 1.2 million barrels per day for six months starting in January 2019,” the report said adding considerable uncertainty remains about Venezuela production and the impact of the US sanctions on Iran.