The International Monetary Fund (IMF) said on Friday that the real gross domestic product (GDP) of the United Arab Emirates (UAE) is expected to grow 1.3 percent in 2017, down from 3 percent last year.
The lower expected growth in 2017 is due to the UAE’s “subdued economic performance during most of 2016,” the Washington-based monetary fund, whose mission is to foster the global financial stability, said in an e-mailed statement.
For 2017, “the weaker economy has elevated risks of bank loan delinquency, requiring higher provisioning, but the UAE’s financial buffers, safe-haven status, sound banks, and diversified and business-friendly economy are helping it cope with the shock,” IMF explained.
The real GDP in the UAE, a major oil supplier with a population of 10.5 million, would pick up to 3.4 percent in 2018, it added.
Oil contributes 29 percent of the UAE economy, making it the second most diversified Gulf state behind Iran.
Earlier in the year, Jihad Azour, director of the Middle East and Central Asia Department at IMF, said IMF did not expect the average oil prices to rise above 55 U.S. dollars per barrel in 2017 and in 2018.
On a positive note, however, “non-oil growth is expected to remain above three percent, supported by accelerating investment in the run-up to the Expo 2020,” IMF said.
The UAE’s trade and tourism hub Dubai will host the world expo from October 2020 to April 2021, the first Arab city to hold the event.