Page 449 - Ministry of Economy - December 2017
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12/25/2017 Challenges may come, but UAE's ready for it | ZAWYA UAE Edition
The UAE's PMI averaged 55.8 in the first three quarters of 2017 as compared with 53.8
during the same period of last year (a 50.0 threshold separates expansion from
contraction). Non-oil activity in Abu Dhabi is improving after a challenging two years during
which deep government spending cuts slowed activity. Key projects, such as the
construction of nuclear plants and airport expansion, are progressing, albeit with delays,
economists said.
While inflation in the UAE will remain subdued as the continued decline in rents offsets
higher imports prices, inflationary pressures from the introduction of VAT on January 1,
2018 will be partly offset by further declines in rents.
Banks in the UAE are well-regulated and supervised and continue to weather the effects of
low oil prices and the moderation in non-oil economic activity. Most analysts expect annual
credit growth to recover from 1.7 per cent at end-2017 to about five per cent in 2018.
They are also of the view that ongoing UAE reforms to develop the domestic capital
markets would increase financing and saving options in the economy.
A joint report by the Institute of Chartered Accountants in England and Wales and Oxford
Economics says that the UAE will record an accelerated growth in 2018 to 3.6 per cent
from 1.7 per cent in 2017. The momentum will further gain pace in 2019 to post 3.6 per
cent growth. The report echoes the GDP growth projected by the IMF, which said recently
the UAE economy; overall GCC growth, meanwhile, is poised to rebound to 2.2 per cent.
Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said that the outlook for the
economy is brightening despite regional and global macroeconomic challenges.
"With two years into Expo 2020 Dubai, the economic growth momentum is expected to
pick up on the back of a vibrant non-oil sector as the country remains on track to establish
a diverse knowledge- and innovation-driven economy," Al Mansouri said.
Hafez Ghanem, World Bank vice-president for the Middle East North Africa, said Dubai is a
good example of how an oil exporter should diversify. He noted that low oil prices are
providing an impetus for Gulf economies to diversify away from the oil industry.
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