ABU DHABI: Sound economic planning and stable government policies have ensured that the UAE economy will continue to grow at a steady pace over the next few years, even though many countries in the developed world face the problem of stagnant economies, a local paper has said.
The UAE’s GDP is expected to grow by 4.3 per cent in 2014 and edge up to 4.5 per cent over the next three years. It is projected to grow at an even faster clip of 4.6 per cent a year in 2018 and 2019.
Dubai-based Khaleej Times in its editorial today commented on the speech of Sultan bin Saeed Al Mansouri, the Minister of State for Economy, at UAE Economic Outlook Forum, who said that the country’s positive economic outlook has also been confirmed by the International Monetary Fund (IMF) in its 2014 report.
The UAE will enjoy a budget surplus of between 6.9 per cent and 10.5 per cent over the next six years. The IMF has also reaffirmed the UAE’s position as a regional and global hub when it listed the country among the 20 largest exporters in the world. Exports of goods and services from the UAE are expected to touch Dh1.47 trillion by the end of 2014. Next year, it is expected to reach Dh1.59 trillion and by 2018 breach the Dh2 trillion-mark. Imports too are rising steadily and this year they are likely to add up to Dh885 billion (as against Dh797 billion in 2013).
The paper says that at a time when foreign direct investment (FDI) inflow to several economies has slowed down, the UAE continues to attract substantial FDI especially in sectors such as tourism, real estate and construction. In the current year, for instance, FDI inflows are expected to touch Dh44 billion, after growing by a hefty 20 per cent in the previous year.
Indeed, the UAE economy will witness buoyancy right up to 2020, when the Expo 2020 will be hosted in Dubai. The minister told the forum that the estimated financial returns from the event would be Dh139 billion and Dubai is expected to get more than 25 million visitors, 70 per cent of them from abroad.
Expo 2020 will expectedly provide a strong impetus to overall economic activity in Dubai, especially in sectors including tourism, aviation and infrastructure development, reinforcing the city’s reputation as a vibrant, global hub. Al Mansouri noted that the Expo will generate more than 277,000 direct jobs between 2013 and 2020; and every Expo-related job will lead to 50 additional jobs, boosting the economies of the vast region including the Middle East and Africa and South Asia.
The minister told the forum that the infrastructure and logistics costs of the Expo is projected to be more than $9 billion, drawing international companies from Europe to the projects. Many of these companies have been experiencing sluggish growth, thanks to the recessionary conditions still prevailing in much of the continent.
Of course, the current and future buoyancy in the economy does not mean that the authorities are ignoring the impact of the current slowdown in large swathes of the developed world, the sharp fall in commodity prices and the possible threat of a setback in growth in the US and China.
As Shaikh Ahmed bin Saeed Al Maktoum, President, Dubai Civil Aviation, and Chairman and Chief Executive, Emirates Airline and the Group, told the forum: “Despite the success we have achieved, and our ambitions, we are on alert to face any challenges that may arise on the global economic horizon, or any impact on our finances.” Thus, for instance, steps have been taken to control government spending to avoid budget deficit. The government is also on the alert against volatility in the real estate market, though it continues to factor the positive contribution of the sector to economic development in Dubai and in meeting real demand.
The paper pointed out government steps to curb speculative practices in the real estate sector by increasing registration fees from two to four per cent of the transaction value and issued guidelines on adjusting rentals. The UAE Central Bank has also introduced new caps on real estate mortgage. And the government has also sought to control inflation to ensure Dubai retains its competitiveness and households are able to manage their budgets.
Another key aspect of the government’s policy is that it is not dependent only on Expo 2020 for future growth. As Shaikh Ahmed pointed out: “The leadership has developed an integrated strategy, which comprises 100 initiatives and 1,000 smart services, to transform Dubai into one of the smartest cities in the world.” Economic activities, lifestyles, transportation, and government services will be aligned with smart technologies, environment and human capital development, leading to the realisation of the knowledge economy, he observed.
“A wise leadership, pragmatic policies and the ability to grasp opportunities and convert them into real benefits for society at large have been the cornerstones of the economic strategy of Dubai and the UAE, ” the paper concluded.