Dubai skyline, Shaikh Zayed Road, Dubai properties
General view of Shaikh Zayed Road in Dubai. Image Credit: Reuters

Dubai: The International Monetary Fund (IMF) has revised the UAE’s economic growth outlook downwards from the October 2018 forecasts.

For 2019, the IMF’s Regional Economic Outlook has projected 2.8 per cent real GDP growth compared to the earlier forecast of 3.6 per cent.

According to the latest IMF projections, the UAE economy grew by 1.7 per cent against the October forecast of 2.9 per cent in 2018. The economy is projected to grow 3.3 per cent in 2020 supported by a strong 4 per cent non-oil growth projected for that year.

“Expo 2020–related spending in Dubai and Abu Dhabi’s fiscal stimulus is expected support near-term growth in the UAE,” said Jihad Azour, the IMF’s Mideast and Central Asia department director.

GDP growth in GCC countries is expected to improve slightly to 2.1 per cent in 2019, up from 2 per cent in 2018.

“Government spending and multiyear infrastructure plans will likely provide some support to economic activity in Kuwait and Saudi Arabia. In Qatar, the beginning of the Barzan Gas Project operations will underpin hydrocarbon production, but nonhydrocarbon growth is projected to moderate in 2019. Non-oil growth is also expected to slow in Bahrain from planned fiscal consolidation under the authorities’ fiscal balance programme,” said Azour.

The IMF observed that headwinds from tighter domestic financial and monetary conditions act as a drag on non-oil growth in some countries. Increases in policy interest rates in the GCC, in line with US Federal Reserve monetary policy normalization, and declines in real estate (Qatar, UAE ) and equity (Dubai, Oman) prices have led to tighter domestic financial conditions, restraining non-oil activity

“Pressures from tighter global financial conditions led to net capital outflows in the region during the second half of 2018, contributing to lower domestic liquidity growth. Global easing of financial conditions in early 2019 is expected to reduce the impact of headwinds,” said Azour.