Dubai: The UAE economy is expected to keep up the momentum through 2020, according to the latest forecast by the International Monetary Fund (IMF) and the Institute of International Finance (IIF).
In its latest World Economic Outlook, the International Monetary Fund (IMF) has forecast the UAE’s GDP growth at 1.6 per cent and 2.5 per cent for 2019 and 2020, respectively.
“We expect non-hydrocarbon real GDP growth to pick up to 1.7 per cent in 2019 and 2.2 per cent in 2020, supported by Abu Dhabi’s three-year stimulus package and Dubai’s spending linked to Expo 2020,” said Garbis Iradian, chief economists, Middle East and North Africa (Mena) of the IIF.
According to the IIF forecasts Abu Dhabi’s real GDP would grow 2.3 per cent and 2 per cent respectively in 2019 and 2020 while Dubai’s economy is expected to record 2.1 per cent and 2.3 per cent growth respectively in the same period, largely driven by non-oil growth.
Expo 2020 is expected to give a one-time short in the arm for the UAE economy according to economists from Standard Chartered.
“We expect a one-off boost to growth from Dubai’s hosting Expo 2020. This should boost UAE GDP growth to 2.1 per cent from 1.7 per cent in 2019. We expect the hosting of Expo 2020 from October 2020 to April 2021 to lift UAE non-oil growth to 3 per cent driving the transitory pick-up in headline growth,” said Bilal Khan, Senior Economist, Middle East North Africa and Pakistan (MENAP), Standard Chartered.
An estimated 25 million visitors, of which 70 per cent foreigners are expected to visit the UAE during the event giving a big push to demand that has been lagging for a while.
“The UAE needs further policy measures to boost domestic demand. In the past, fiscal policy measures have been largely focused on supply side and that worked well. Now with most infrastructure development and construction complete, the policy boost should come on the demand side. The recent policy changes such as changes in visa rules and business ownership are likely to support the demand side of the economy,” said Carla Slim, economist MENAP, Standard Chartered.
While the Standard Economists expect the Expo 2020 to boost domestic consumption, particularly in the retail and hospitality industries, which have struggled from overcapacity in recent years, they see no meaningful recovery for the property market in the near term. Residential property prices continue to decline in both Abu Dhabi and Dubai. Although the Dubai government recently formed a committee to balance property demand and supply, including by restricting competition between quasi-government and private firms, the impact on prices will depend on implementation.
“Policy action is an encouraging step, but a meaningful recovery in the sector appears unlikely in the near term given expectations of additional supply in the coming months,” said Khan.