A new report from Dubai Chamber of Commerce and Industry (Dubai Chamber) has predicted prosperous years ahead for the UAE economy. The recently issued outlook document cites several factors to support these projections.
The report was rooted in data from prominent international research institutions, including Haver Analytics, Fox Economics, the United Nations Conference on Trade and Development (UNCTAD) and the International Monetary Fund (IMF).
In addition to increased confidence, the UAE’s economic outlook is buoyed by an upswing in government spending on infrastructure projects as part of the preparations for Expo 2020 Dubai. The net result is expected to encourage the banking sector to increase credit activity in non-oil-related business, growing the local business community’s competitiveness and attractiveness to foreign investors.
Dubai Chamber’s report predicted that the UAE economy would return to long-term growth in 2018 and beyond, demonstrating that despite the dwindling oil prices witnessed since mid-2014, coupled with weaker global demand for trade, the UAE has successfully strengthened its global budget with relative spending cuts at the government level from 2015 onwards.
This has been achieved most notably by revoking subsidies and introducing value added tax (VAT) as of January 2018 to diversify the government’s sources of income.
The report highlighted that the UAE economy bucked the downward trend affecting global markets in recent years and maintained its strong points, which have helped maintain the same rapid growth that was witnessed in the lead-up to the crash in oil prices.
The report highlighted these strong points, which include a comprehensive, robust and stable economic environment; a business-friendly atmosphere; a solid, world-class infrastructure and a prime strategic location that has helped establish the country as an international centre for business, financial and maritime services.
According to the World Investment Report 2018, foreign direct investment (FDI) inflows to the UAE for 2017 increased to US$10.4 billion, registering an annual growth of approximately 7.8% and ranking the Emirates the as the 30th largest global recipient of FDI inflows and the largest recipient in the MENA region and GCC (Figure below) for last year.
The UAE’s performance for 2017 bucked the trend, with the World Investment Report revealing that the combined global foreign direct investment (FDI) inflows decreased by 23% to US$1.43 trillion, despite the recovery in world GDP and trade.
According to the latest IMF report on the world economy, global GDP growth strengthened to 3.8% in 2017, with a notable rebound in global trade. It was driven by an investment recovery in advanced economies, continued strong growth in emerging Asia and signs of recovery in several commodity exporters on the back of substantial gains in oil prices.
In 2018 and 2019, global GDP is expected to grow to 3.9% supported by strong economic momentum, favorable market sentiment and the expected positive repercussions of an expansionary US fiscal policy.
