Abu Dhabi, (Business News Report)|| The UAE economy will grow by 2.2% during the year 2021, the International Monetary Fund (IMF) said.
The UAE economy contracted by 5.8% during 2020 due to the Coronavirus pandemic.
“The economic recovery is gaining momentum, supported by the UAE’s early and strong health response, continued supportive macroeconomic policies, and rebound in tourism and domestic activity related to the delayed Expo 2020,” the IMF said in a statement.
The fund’s statement came after the conclusion of consultations with the UAE authorities under Article 4 of the fund’s system.
The statement stated that the GDP growth is expected to reach 2.2 percent in 2021, driven by the growth of the non-oil sectors by 3.2 percent.”
In terms of public finances, the IMF expected the budget deficit to shrink in 2021 to 0.7 percent of GDP, and to turn into a surplus in 2022.
Meanwhile, the UAE recorded a deficit of 2.3 percent in 2020, which witnessed a decline in oil demand and a collapse in prices.
The IMF also said in its statement that these improvements (in the UAE public finances) reflect revenue gains from current and projected higher oil prices, and stronger economic growth along with fiscal reform efforts.
The UAE authorities did not issue final data on actual growth in 2021, but the UAE Central Bank had earlier expected the country’s economy to grow by 2.1 percent.
The IMF’s Executive Directors commended the successful vaccination program and the rapid policy response to combat the effects of the pandemic, and welcomed the ongoing economic recovery.
However, the IMF noted to significant negative risks persist, calling on the UAE authorities to make more efforts to maintain macro financial stability, promote economic diversification, and expand intergenerational justice.
The UAE has also implemented one of the fastest vaccination campaigns against the Coronavirus, and data from the UAE Ministry of Health indicate that about 95 percent of the population have been vaccinated.
It should be noted that the UAE and the Gulf states benefited greatly from the remarkable rise in oil prices in the second half of last year, which is currently approaching $100 per barrel.
