Dubai Headed to a Period of Accelerated Growth
Dubai is weathering the Crude Oil-led economic slowdown afflicting its GCC neighbors and will enter a period of “rapid acceleration” in the buildup to the Expo 2020 trade fair, the International Monetary Fund says.
Speaking to the media, the IMF’s mission chief for the UAE, Zeine Zeidane, said he expected 3.3% GDP growth in Dubai this year, but preparations for the international event would boost this to 5% in Y 2020.
In contrast, the IMF expects neighboring Abu Dhabi to grow 1.5% this year from 4.3% in Y 2015.
Mr. Zeidane said Dubai’s “diversified economy” would help it overcome the negative impact of lower Crude Oil prices felt by regional exporters.
He also cited factors including its safe-haven status, a weaker USD and the strong performance of trading partners like India as cause for optimism.
On a national level, the IMF forecasts the UAE to expand 2.3% this year, largely due to the slowdown in Crude Oil-rich Abu Dhabi.
“Abu Dhabi has delivered strongly on fiscal consolidation in 2015,” Mr. Zeidane said. He added that Abu Dhabi and the UAE as a whole “have large fiscal buffers that provide them with policy space to adjust to new market conditions, and they should use the fiscal space they have.”
Governments across the region are expected to post sizable fiscal deficits this year due to lower Crude Oil revenues.
Ratings agency Moody’s said in March the regional deficit would reach 12.5% of GDP this year, up from 9% in Y 2015.
Fiscal deterioration is expected to be faster in Saudi Arabia, Bahrain and Oman than the UAE, Qatar and Kuwait.