UAE ECONOMIC OUTLOOK – 2015
- March 23, 2015
- Posted by: RKonnect
- Category: Business & Economy
IMF forecast UAE economy to grow at modest pace in 2015-16 weathering the recent slump in the oil prices. This anticipated growth is backed by the non-oil sectors contribution to the country’s GDP in 2014 providing much need economic stimulus.
Gross Domestic Product (GDP) – In 2014, UAE’s GDP grew at 4.3% with the non-oil and gas sectors which includes the real estate, retail, tourism and logistics etc., tentatively contributing 62% towards the GDP, while the oil and gas sector contributed 38% towards the UAE GDP.
GDP Forecast – Nevertheless, IMF has lowered its 2015 GDP forecast for UAE by one percent to 3.6% citing slump in oil prices as the main reason. According to the IMF’s report, the UAE economy is projected to grow at 3.6% in both 2015 and 2016 whereby in isolation, Dubai and Abu Dhabi’s economies are expected to grow at 4.5% and 3% respectively in 2015.
Budget Expenditure – UAE cabinet approved AED 49.1 billion-draft federal budget for the year 2015, an increase of 6.5% as compared to 2014. The breakdown of the budget shows that 49% of total budget (AED 24 billion) will be spend on social development and social benefit, 41% (AED 20 billion) on government affairs and 3.7% (AED 1.8 billion) on infrastructure.
UAE Inflation and GDP Rate (%)
The projected annual inflation rate in 2015 and 2016 is 2.3% and 2.5% with biggest increase in housing expenditure by 2.48% due to increase in housing cost. However, inflation is still below its historic average, which indicates that the economy is steadily growing with unemployment rate reduced to 4.2% in 2014.
Economic Projections – Based on economic data, it can be stated that UAE economy is getting diversified whereby non-oil sectors are starting to contribute more with time. However, due to dramatic dip in oil prices, UAE’s GDP is expected to grow at a modest pace in 2015. Even though, the inflation is below the average level but it is still reasonable to support economic growth.