The UAE is benefitting more from the improvement in world trade and tourism flows than other GCC economies, according to a new report.
A study by accountancy and finance body ICAEW with Oxford Economics forecasts 3 percent global economic growth in 2018 – the fastest rate since the 2009 rebound.
This is up from 2.8 percent in 2017 and 2.3 percent in 2016 – as business activity increases in response to expectations of stronger global demand and reduced deflationary pressures.
The GCC in general is unlikely to benefit from this growth because of its dependence on oil revenues but the UAE economy – with hydrocarbons accounting for just 22 percent of GDP – is diversified enough to capitalise on the broad-based global uptick.
ICAEW/Oxford Economics forecasts steady 1.7 percent overall GDP growth for the UAE this year.
This is just over half as fast as 2016 due to OPEC production cuts but constitutes a greater contribution from the non-oil sector, from 2.3 percent in 2016 to 2.8 percent in 2017, the report states.
The UAE’s infrastructure investments have helped unlock this growth potential, it adds. In particular, Dubai International Airport (DXB) is ranked the world’s third-busiest airport and DP World is the ninth-busiest container port globally.
DP World on Tuesday reported 10.7 percent year-on-year growth in gross container volumes in the first half of 2017, attributing the increase to an improvement in global trading conditions.
Meanwhile, passenger traffic through DXB increased 7.4 percent in the first quarter of the year, and this improvement is mirrored in the wider non-oil sector, said the report.
It added that several key infrastructure projects are forging ahead, partly in support of Expo 2020, but also more widely driven by the ongoing expansion of trade and transport links.
Business investment has been supported by an improving financial environment, with stabilisation of oil prices, the easing pace of austerity and sovereign debt issuance all helping to ease liquidity pressures in the UAE banking system.
Michael Armstrong, FCA and ICAEW regional director for the Middle East, Africa and South Asia (MEASA), said: “The UAE is in a stronger position than other countries in the region due to its diversified economy, excellent infrastructure, political stability and ample foreign assets.
“Its reputation as a trade hub has helped the country to benefit from the rebound in the world economy more immediately than other economies in the GCC.”