In its report, entitled “IIF Sees Favorable Prospects for GCC Countries, Struggles for “Arab Spring” Countries”, Institute of International Finance (IIF) raised its 2013 growth forecast for the United Arab Emirates to 4.7 percent (from 3.9 percent previously) on higher than expected oil output during the first three quarters of this year, according to the official website of the Institute of the International Finance (IIF).

Nonhydrocarbon real GDP growth is forecast to accelerate from 4.1 percent in 2012 to 4.6 percent in 2013, driven by higher government capital spending in Abu Dhabi and continued robust growth in trade, tourism and transportation in Abu Dhabi and Dubai.

“Despite our favorable near-term outlook, IIF has reservations about the renewed cycle of risk taking, as shown by the strong recovery in real estate and the sharp increase in equity market prices,” said Dr. Garbis Iradian, deputy director, Africa and the Middle East at IIF and principal author of the report. “IIF welcomes the recent plan of the Central Bank of the U.A.E. that includes limits on banks’ exposure to real estate and government-related entities. Furthering structural reforms, strengthening federal institutions and GREs corporate governance, and improving risk management practices are also important to reinforce the U.A.E.’s resilience to external shocks.”