The International Monetary Fund (IMF) said that UAE’s non-oil growth could exceed one per cent this year and pick up to around three per cent in 2020—the fastest since 2016—on the back of Expo 2020 as well as fiscal stimulus.
Last month in its Regional Economic Outlook, the Washington-based fund gave a provisional forecast of 1.6 per cent growth in 2019 and 2.5 per cent for 2020.
The IMF stated that sustaining robust non-oil growth after Expo 2020 remains a key priority, made all the more pressing over the longer term by the likelihood that global oil demand will slow in the face of technological advances as well as policy responses to climate change.
Additionally, the IMF commended the UAE government for implementing a number of measures including the adoption of a foreign direct investment (FDI) law which allow 100-per cent foreign ownership in selected sectors and the elimination of fees as well as penalties.
The IMF mission also welcomed the authorities’ steps to implement a comprehensive national SME development strategy. The UAE SME Council, the sector is expected to contribute over 50 per cent to the country’s GDP in 2019.
The UAE government is committed to boosting the contribution and performance of local SMEs and has taken a leading role in establishing strategic initiatives to support funding for the sector.
According to the IMF, the UAE took important steps in reducing start-up costs, operationalizing the new insolvency framework and promoting greater financial inclusion.
The UAE Ministry of Economy said that the SME sector represents more than 94 per cent of the total number of companies operating in the country and provides jobs for more than 86 per cent of the private sector's workforce.
In the financial sector, the said that strengthening and developing of the UAE financial sector should support private-sector development while mitigating risk, commending the monitoring of real estate and construction exposures to mitigate risks to the financial sector.
The IMF also said that reducing the footprint of government-related entities (GREs) in non-strategic sectors will promote competition and enhance private-sector growth. The fund recommended that fiscal frameworks should be complemented with better monitoring and analysis of GRE-related contingent liabilities.