Diversification key to success: UAE marches ahead despite challenges
Dubai: The UAE economy continued to witness strong economic progress despite the challenging regional and global economic conditions in 2016, according to the annual report of the Ministry of Economy.
“During this challenging year, the UAE economy has maintained its growth and high competitiveness thanks to the directives of our wise leaders and clear government vision under which goals, plans and initiatives were developed,” said Sultan bin Saeed Al Mansouri, UAE Minister of Economy.
The report said the country is making continuous efforts to reduce oil dependence and in the context of low oil prices and a global slowdown.“The UAE has remained advanced, thanks to its capability to reduce the effects of many economic variables such as the relatively low prices of crude oil. The UAE has also shown resilience despite a major global economic slowdown, decline in the number of emerging economies, and trade and investment instability in some parts of the region,” said Al Mansouri
The minister said that the government’s economic diversification policy is one of the core pillars of the UAE’s economic resilience, resulting in its increased capability to address economic difficulties and challenges. The country’s solid approach and diversification plans, he said, have led to the non-oil sector’s contributions to the gross domestic product (GDP) in 2015 rising at about 77 per cent at current prices and 70 per cent at constant prices.
“We continue to see the UAE as the best placed of the GCC economies in terms of its ability to withstand sustained lower oil prices. The economy is probably the most diversified in the region, the fiscal buffers are large and the budget is expected to be close to balanced next year,” Khatija Haque, Head of MENA Research at Emirates NBD said in a recent update on UAE economy
The Ministry’s annual report shows the manufacturing, construction, retail, real estate, storage, transportation, telecommunications, and tourism industries, among others, recorded substantial GDP contributions, demonstrating the country’s steady and balanced steps towards a post-oil era coupled with well-informed policies and programs to guarantee sustainable development.
According to the Ministry of Economy, the UAE’s GDP tripled in the past 10 years, climbing from almost Dh511 billion in 2006 to Dh1.58 trillion in 2015. The figure is expected to reach Dh1.8 trillion by the end of 2016. The growth rate at constant prices reached 3.8 per cent last year compared to 3.1 per cent in 2014.
Economists and analysts expect higher oil revenues with the expected average oil price increase to $55 per barrel next year from $44 this year should boost the growth prospects to the country in 2017.
The UAE GDP growth is expected to accelerate to 3.4 per cent next year from an estimated 3 per cent in 2016.
The financial control and the current rationalisation of government spending policies adopted following the record decline in oil prices compared to mid-2014 did not prevent the government from implementing countercyclical policies and tapping the state’s cumulative cash reserves.
Strong government spending targeted at economic diversification and major infrastructure projects including those targeted in preparation for World Expo 2020, as well as the expansion of airports, the Etihad rail network, air and marine transport systems and road networks in the country are expected to boost the growth outlook.
In 2015, government spending reached Dh179 billion, up 3.8 per cent from 2014 and by 4.5 to 6 per cent compared to levels before the emergence of significant oil price fluctuations. The country’s economic diversification plan has contributed to the non-oil sector’s growth and boosted sustainable development in the medium and long term.
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