The UAE’s economy is faring well, and will pick more momentum going into next year, underpinned by Expo 2020 and government policies, according to the International Monetary Fund (IMF).
In a new report, the IMF outlined sustained growth over the medium term and further diversification of the economy as key priorities for the UAE.
“Following a challenging period, the economy is recovering. Non-oil growth could exceed 1 per cent in 2019 and pick up to around 3 per cent next year, the fastest since 2016, on the back of Expo 2020 and fiscal stimulus. Overall, GDP growth would register 2.5 per cent in 2020,” it said.
The IMF team hailed the government’s efforts to implement a holistic national SME development strategy, as well as key steps such as adopting a foreign direct investment (FDI) law allowing 100 per cent foreign ownership in selected sectors, and reducing/eliminating fees.
Furthermore, the IMF recommended the establishment of a unified agency for SME promotion purposes.
“The IMF team discussed two key policy priorities with the authorities: promoting the growth of the non-oil private sector, including small and medium enterprises (SMEs); and strengthening fiscal frameworks to ensure both sufficient saving of oil wealth for future generations and smoothing of short-term fluctuations” the report said.
The mission recommended fiscal frameworks to be supported with better monitoring and review of GRE-related contingent liabilities, and the establishment of independent fiscal councils to ensure implementation of the frameworks.
Additionally, the report supported the real estate and construction exposures to be under “prudential” control and called for large noncompliant exposures to be brought within approved limits. It also recommended greater financial inclusion.