The International Monetary Fund (IMF) has lifted its forecasts for economic growth in the United Arab Emirates (UAE) because of expectations that oil production and state spending will rise.
The UAE economy is now likely to expand 2.9 per cent this year and 3.7 per cent next year, Natalia Tamirisa, IMF mission chief to the country, said late on Sunday.
The gross domestic product of the Arab world’s second biggest economic country grew 0.8 per cent in 2017, preliminary UAE data shows, reports Reuters.
In April, the IMF had predicted GDP would expand 2.0 per cent this year and 3.0 per cent next year.
A deal among global producers to cut oil output was eased in mid-2018, letting the UAE start raising output.
Meanwhile, rebounding oil prices have given the government more money to spend; on Sunday, the UAE cabinet approved a 17.3 per cent rise in the UAE federal budget for 2019 compared to this year.
This may compensate for sluggish growth in the private sector, which faces rising interest rates as US monetary policy tightens and has also been hit by slumping property prices.
The UAE’s consolidated fiscal deficit, including individual emirates as well as the federal government, is expected to remain stable at about 1.6 per cent of GDP this year and turn to a surplus next year, the IMF said.