The UAE’s GDP is expected to see 3.2 per cent growth in 2011.
The International Monetary Fund (IMF) expects the economy in the UAE to rise by 2.4 per cent in 2010 and experience 3.2 per cent growth in 2011. These forecasts issued in the recently released World Economic Outlook are positive after a 2.5 per cent contraction recorded in 2009.
The IMF predictions are in agreement with earlier forecasts issued by Standard Charter, NCB Capital and the EIU (or the Economist Intelligence Unit).
Previous IMF expectations put the growth of GDP at 3 per cent this year, up from even earlier predictions of 2.7 per cent.
Forecasts put consumer prices on the rise, climbing 2.5 per cent next year, after the 2 per cent increase this year and the 1.2 per cent rise in 2009. These figures point to a spiral of inflation.
Saudi Arabia is expected to see increased growth as well, with 2010 forecasts stating a 3.4 per cent increase and 2011 forecasts expecting a 4.5 per cent rise. These increases are after a rise of only 0.6 per cent last year.
IMF’s Regional Economic Outlook sees consumer prices in Saudi growing 2 per cent for 2010 and a further 2.5 per cent for next year, also pointing towards rising inflation.
The Mideast and North Africa (Mena) region is experiencing strong recovery according to the IMF. After oil prices rebounded the recovery gained strength and predictions for the 2010 GDP call for a 4.1 per cent growth, after only 2 per cent growth in 2009. In 2011 the economy should look even better, with 5.1 per cent expansion expected.
The report noted that the region was strengthened when oil prices climbed out of the 2009 slump, causing oil exporter receipts to rise.
Those same economies are still vulnerable should oil prices experience another decrease. Also turbulence in European economies could have an effect on the non-oil exports of the region.
Oil exporting nations will experience a 3.8 per cent growth this year and a 5 per cent increase in 2011, according to forecasts.
The regional economic outlook is tied to developments worldwide and is largely determined by how these developments affect the price of oil. The IMF noted that these influences are not limited to the exporters in Mena.
Only modest increases in the price of oil are forecasted for the future.
As Europe counts for nearly 50 per cent of total exports from the Mena region, possible economic difficulties there could pose a risk for oil importers in Mena.
The IMF also noted that slowly growing deposits and declining funds coming in from external sources are a challenge for regional economies and limit the banking sector’s ability to lend.Paul Holdsworth, Staff Writer, Gulf Jobs Market News