Dubai Economic Boom Poised to Drive IMF Growth Forecast for UAE
11/27/2013 11:30 am EST
The most recent data indicates a relatively high growth rate for Dubai this past year, writes Hadeel al Sayegh, of The National, which, moving forward, should benefit other countries in the UAE as well.
The IMF may raise its economic growth forecasts for the UAE this year, helped by a rebounding Dubai economy.
The fund in September predicted GDP growth of 4%.
“When you look at the most recent data that has come in, including data for Dubai for the first six months of the year, those figures are showing relatively high growth rates for Dubai…which is just under 5%,” said Masood Ahmed, the director of the Middle East and Central Asia department. “I'm sure this will feed through into the end of year numbers for the UAE as a whole and will end up being revised upwards.”
Dubai is recovering from a 65% decline in property prices. Home values rose 22% in the second quarter from a year earlier, the broker Knight Frank said in September.
The emirate's rebounding property market, combined with a strong performance in trade, manufacturing, transport, and finance, lifted its GDP to more than 4% in the first half of the year, Mr. Ahmed said.
Dubai's booming economy has been reflected in the emirate's stock market, where shares listed on the Dubai Financial Market General Index (DFMGI) have surged more than 80% this year.
Higher oil prices and movement of assets from revolution-stricken Arab countries to the UAE have boosted the Emirates' economy.
The governments of the UAE, and wider Gulf region, have increased their spending in response to requirements at home and abroad.
“The point we have been stressing, is that the expenditure of many countries in the Gulf have been rising rapidly and break-even prices for oil—which is the price where their budgets are balanced—have risen,” Mr. Ahmed said.
“Some countries—such as Bahrain for example—are already in deficit. So they need to build more resilience into their budgets and make sure they are saving enough for future generations.”