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Diversification to boost UAE’s non-oil growth in 2018

Growth to reach 3.1% in 2017 and 3.5% in 2018, central bank chief says

Image Credit: Ahmed Kutty/Gulf News
Mubarak Al Mansouri (centre), UAE Central Bank Governor, with (from left) Yasir Barnia of Arab Monetary Fund(AMF) Dr.Abdul Rahamn Al Humaidi, Chairman AMF, ,Abdulaziz Dahi, Central Bank Murutania and Jalaldin bin Rashab, AMF during the Arab monetary fund and central bank of UAE 41st normal session of the central bank governors meeting at the Sofitel hoten in Abu Dhabi.
Gulf News

Abu Dhabi: The UAE expects to see higher non-oil growth next year with relatively stable growth in 2017, the country’s central bank governor Mubarak Rashid Al Mansouri said on Sunday.

“We are expecting the growth of non-oil sector to reach 3.1 per cent this year and 3.5 per cent or even more next year. Despite the continuous decrease in oil prices, the national economy has been able to sustain the growth due to a diversified economy.”

Al Mansouri was speaking at the 41st normal session of the Council of Arab Central Banks Governors in Abu Dhabi. The meeting is being attended by central bank governors from the Gulf as well as from other Arab countries.

The UAE Central Bank governor said the drop in oil prices has not affected the public budget or the projects in education, health care and infrastructure sectors.

“Government spending has increased since last year, continuously increased its non-oil exports despite an increase in the dirham against other currencies and FDI [foreign direct investment] as the UAE is a safe place to invest whether in the commercial sector or tourism.”

“We are a hub in the region in several sectors and the UAE is placed 16 out of the 138 countries when it comes to competitiveness.”

He also added that the banking sector played a key role in providing financing needed for the growth in the non-oil sector.

“Deposit growth of the banking sector reached 6.4 per cent annually till last June and assets of the banking sector grew by 5.4 per cent till last June. The central bank is observing those indicators continuously in order to provide finance that is needed by the economy and to keep the banking sector safe and sound in the country.”

Speaking on the SME sector, he said the central bank has created a team for devising strategies on SMEs in order to provide the needed funding for these companies at a reasonable rate.

“SMEs are an important part of the economy but they are still facing challenges including access to financing.”

The UAE has been investing billions of dollars in transportation, industry and tourism that is helping to boost the economy’s non-oil sector. This move is likely to compensate for the lower growth due to lower oil prices.

The governor also said the global economy has been on a recovery path recording better than before growth of 3.5 per cent in 2016 and projected to grow by 3.6 per cent next year.

The Arab Monetary Fund (AMF) director-general in his remarks said the AMF forecast that Arab countries will grow at a rate of 1.9 per cent in 2017 and 2.9 per cent in 2018.

“The growth rate is still lower than desired and more progress is needed to alleviate unemployment,” said Dr Abdul Rahman Bin Abdullah Al Hamidy.