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The International Monetary Fund (IMF) recently concluded a mission to the UAE, releasing its findings on the state of the UAE economy. According to research, the IMF suggested that the economy was “at a turning point” on the back of substantial of Expo 2020 investment being completed by the end of this year. New investment plans from government bodies and stimulus packages are expected to accelerate as oil prices inch higher.
The IMF predicts that the UAE’s economic growth could exceed 2% this year and approach 3% in 2020-21. It stated that structural reforms, consolidation in public and private sectors, including some large commercial banks, and a slight increase in interest rates have all contributed to the adjustment in the economy. Weaker external demand and heightened geopolitical tensions resulted in slower non-oil growth – 1.3% in 2018 – while the overall economy grew at 1.7%.
The report added that sustaining strong growth after Expo 2020 will depend on the performance of non-oil sectors, the reforms introduced and the stimulus packages. To this effect, the IMF recommended reducing public sector share to encourage more private-sector players to help boost growth. This, along with strengthening the opportunities for SMEs and encouraging more Foreign Direct Investment (FDI) should be the priorities.
Additionally, the recent adoption of the federal debt law was also welcomed by the IMF. It added that the issuance of local-currency government securities should proceed in order to establish a benchmark yield curve.
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