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The Central Bank of the UAE revised upwards its growth forecast for the country to 2.4% for 2019, from 2% earlier this year, driven by faster growth in the non-oil sector.
The bank said in a report that the economy expanded 2.2% in the second quarter, with non-oil growth at 1.5%. The pickup in non-oil activities is also reflected in the rise in the Purchasing Managers’ Index, which reached an average of 58.2 in Q2 2019. A reading above 50 indicates expansion in the economy.
“The improved outlook for growth is due to expected rising public and private spending at the federal and emirate levels, higher investment before the highly-anticipated Expo 2020 and continued regional economic recovery, in light of the monetary policy easing in the US,” the central bank said in its second quarterly economic review.
“On the other hand, the oil sector is expected to grow, notwithstanding current output levels, benefiting from the ADNOC initiative of investing in value-added goods and services by more than Dh400 billion over five years,” it added.
The oil sector is forecast to grow this year by 5%, compared to 2.8% last year. Non-oil growth for 2019 is forecast to reach 1.4%, up from 1.3% in 2018.
According to the review, the International Monetary Fund has revised global growth downward to 3.2% for 2019 and to 3.5% for 2020, mainly due to sluggish growth in developed economies amid trade wars, low productivity growth, and increasing market volatility.
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