Dubai: The UAE’s overall real GDP [Gross domestic product] is estimated to have grown by 2.9 per cent in 2019, according to the quarterly economic review of the Central Bank of UAE for the fourth quarter of 2019.
The improved growth in the year, according to the central bank was driven by the growth in the both nonhydrocarbon sector and the hydrocarbon sector. The hydrocarbon sector exhibited significant growth, mainly due to the two-digit growth in condensates and natural gas production.
The central bank’s lastest growth estimate is much higher than the 1.6 per cent GDP growth estimate by the International Monetary Fund (IMF) and its own previous estimate of 2.3 per cent.
Recently the IMF revised its growth forecast for the UAE upwards following its Article IV Consultation with UAE authorities. The IMF team, after discussions with the UAE government concluded that the country’s GDP will grow up to 3 per cent in 2020 from a relatively modest growth in 2019.
According to the central bank report, the country’s economic sentiment is estimated to have improved in the fourth quarter of the year benefiting from an increase year on year in government spending by 3.3 per cent in the third quarter of 2019 compared to a decline by 1.4 per cent in the previous quarter and a quarter on quarter increase in oil prices by 2.4 per cent
The central bank also observed that there have been robust improvements in the labor and credit markets. In particular, employment in the private sector increased by 2 per cent year on year , compared to a 1.1 per cent rise in the previous quarter and 38,765 net new work permits have been issued to expat workers in the fourth quarter of 2019, compared to 13,085 net new permits in the third quarter.
Total credit expanded by 6.2 per cent, compared to a growth rate of 5 per cent in the third quarter of 2019. Further, the apex bank observed that higher investments ahead of the Expo 2020 and increased prospects of economic growth.
While the economy is estimated to have posted a real growth of 1.3 per cent in the fourth quarter of 2019, the non-oil real GDP is estimated to have picked up momentum to 2.4 per cent compared to an estimated growth of 1.2 per cent in the third quarter.
The decline in oil prices by 6.5 per cent during the fourth quarter of 2019 as well as the continued fall in rent and prices have continued to weigh negatively on inflation in the UAE. However, the pickup in non-energy growth and employment have moderated the pace of deflation as consumer price index (CPI) declined by 1.6 per cent compared to a drop of 2.1 per cent in the previous quarterm, the central bank said.