A new report has spoken about how the UAE economy will continue to grow at a brisk rate and how it will be the fastest growing economy in the GCC. The GCC is the Gulf Cooperation Council; a political and economic alliance consisting of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. We look at the reasons why UAE is going to be among the top fastest growing GCC economies in this coming year:
According to a projection made by the analysts of The Institute of International Finance (IIF), UAE is set to grow at the rate of 3.1% in 2019. This is higher than the estimated growth rate of 2.9% for 2018. The nominal GDP is also set to see a rise from $434 billion (Dh1.592 trillion) in 2018 to $444 billion (Dh1.629 trillion) in 2019.
According to Taimur Khan, Research Manager of Knight Frank, there are sound reasons for the predictions made about UAE’s continued growth. Higher oil prices will ensure continued growth. Add to this is the fact that the government has created a range of stimulus packages and have also eased business regulations, making it easier for the private and public sectors to function.
In its October projections, The International Monetary Fund had predicted that UAE would grow at the rate of 3.7% in 2019. The World Bank had predicted a 2% growth for the UAE in 2018, which is expected to accelerate to 3% in 2019 and further to 3.2% in the two years to follow.
Lower rates of consumer inflation are likely to contribute to higher growth rates in the year to come. There was a VAT related spike in prices during 2018, however the situation is likely to ease in 2019. This is likely to be one of the reasons that will contribute to a higher rate of growth in the UAE vis-à-vis other GCC countries such as Saudi Arabia (predicted to grow 2%), Kuwait (0.4%) Qatar (2%) and Bahrain (2.4%). Oman is likely to enjoy the same growth rates as UAE it is estimated.
The UAE government's initiatives to improve ease of doing business in the country such as easing visa regulations, simplifying processes and permits are another reason for continued growth. These initiatives will help to spur investment from aboard and will also help spur domestic business growth.
Since the UAE won the bid to host the 2020 Expo in Dubai, this has given a fresh impetus to several sectors of the economy, which is also likely to have a positive trickledown effect for the economy overall. The expo has triggered the opening of new hotels, will result in improved tourist inflows and an increased interest by overseas businesses to invest in the UAE commercial and property sectors.
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