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UAE non-oil economy to see steady growth by 2021 - Report

UAE non-oil economy to see steady growth by 2021 - Report
Inflation rate is expected to remain flat over the coming two years

UAE – Mubasher: The UAE’s economic performance is likely to grow steadily, with non-oil economic growth reaching 3.6% by 2021, according to the National Bank of Kuwait’s (NBK) UAE outlook report.

The GCC state’s inflation rate is expected to remain flat over the coming two years, the report revealed.

NBK projected the UAE’s real gross domestic product (GDP) to increase to around 3% in 2021 from 2.2% in 2018.

The leading bank also highlighted that accommodative monetary policy, backed by the low global interest rate environment, in addition to enhancing public finances, prompting policy-making, and reforming pro-investment reforms will boost the economic performance.

As for real oil sector growth, the report expected it to be hinged on the Organization of the Petroleum Exporting Countries’ (OPEC) production cut agreement, which was recently extended until March 2020.

At the level of real estate sector, residential property prices in the emirate of Dubai have been falling since 2014 due to oversupply and somewhat tighter regulations, which could consequently lead to lower activity in the sector over the medium term, the report added.

Consumer price growth in the UAE is likely to marginally rise again towards the end of 2019, it said.

However, inflation is expected to hit 1% and 1.5% in 2020 and 2021, respectively, NBK noted.

“The fiscal balance should improve and return to surplus in 2020 on the back of higher oil and non-oil revenues, the latter helped by higher taxes and fees due to a pick-up in economic activity,” the lender said.

Any increase in the country’s oil and non-oil export earnings would gradually boost current account surplus, which is gradually recovering, the report noted, pointing out that the current account surplus is likely to rise to an average of 9% over 2019-2021.