UAE Ministry of Economy expects GDP to reach 2% in 2019
GDP levels fell after the 2014 oil price crash but have been improving since 2017
Economic growth in the UAE is expected to reach 2 per cent this year, according to a new report released by the UAE Ministry of Economy. GDP growth in the country was recorded at 1.7 per cent in 2018 and is expected to continue on an upward trajectory on the back of an increase in oil output, with production and export capacity expected to reach about 3.1 million barrels per day in 2019.
Compared to a 0.5 per cent growth in 2017, GDP growth accelerated last year due to non-oil growth of 1.3 per cent and oil GDP growth of 2.8 per cent.
The oil sector currently makes up about 30 per cent of the UAE’s GDP, with the non-oil sector accounting for 70 per cent. The wholesale, retail and vehicle repair sector makes up 11.6 per cent of non-oil GDP, while the construction, manufacturing and transport and storage sectors each make up around 8.5 per cent.
The UAE continues to be affected by macroeconomic conditions, the minister of economy said.
“Global economic activity has been weak in 2019, as a result of numerous updates that have affected the entire economic landscape,” said Sultan bin Saeed Al Mansoori, UAE Minister of Economy, in the report. Nevertheless, the UAE economic model “has been able to limit the impact of these global economic variables on the national economy”, he said.
The report was unveiled at the UAE Economic Forum hosted by the Dubai Government's Department of Economic Development on Wednesday.
Nada Al Hashimy, director of economic research at the Ministry of Economy, told the forum that the global repurcussions of the trade war between US and China continue to have a trickle-down effect on GCC economies.
UAE and China trade volumes peaked in 2017 at 12.8 per cent of the UAE's total trade volumes, but declined to 10.3 per cent in 2018. The country’s trade volumes with the US on the other hand, saw a high of 8.2 per cent in 2016 but dropped to 6.5 per cent in 2018.
The UAE's non-oil foreign trade grew by 0.5 per cent in 2018 to Dh1.54 trillion, due to a 9.7 per cent increase in non-oil exports to Dh637.6 billion. The trade balance surplus for the UAE is expected to increase by 4.1 per cent to reach about $84.8bn (Dh311.42bn) in 2019 as imports dropped by 5.1 per cent.
The value of foreign direct investment inflows grew 0.3 per cent to about $10.38bn in 2018 from $10.35bn in 2017. Although FDI had an average growth rate of -1.6 per cent between 2014-2018, the country is expected to witness higher inflows of between 15 to 20 per cent across 2019 and 2020.
Consumer price inflation increased to 3.1 per cent in 2018 compared to 2 per cent last year - an increase that was a result of the introduction of value added taxes and a hike in oil prices for the first ten months of the year. Overall inflation in 2019 is expected to see a decline to -1.2 per cent.
Updated: December 11, 2019 05:59 PM