The non-oil sector continues to look sprightly: The PMI rose in October on the back of higher new orders at home and abroad, with employment increasing for the 18th straight month. However, as is the case across the Gulf region, oil production cuts have dented overall economic growth. In early November, the cabinet approved the 2018 federal budget. It is significantly more expansionary than last year’s, and plans a 5.6% increase in expenditure to further solidify non-oil growth, with a particular focus on education, health and other social development programs. The cabinet simultaneously aims for a balanced budget, reflecting the greater fiscal space generated by the substantial uptick in oil prices in recent months. Although the federal budget is only a small part of total government spending—with emirate-level spending making up the rest—it remains an important weathervane of the overall direction of fiscal policy.
United Arab Emirates Economic Growth
Growth should pick up significantly next year, as the oil sector recovers and the non-oil sector benefits from preparations for the Dubai 2020 World Expo, which should boost fixed investment. FocusEconomics panelists expect GDP to rise 2.9% in 2018, which is down 0.1 percentage point from last month’s forecast, and 3.1% in 2019.
United Arab Emirates Economy Data
|GDP per capita (USD)||41,685||42,136||42,336||37,743||–|
|GDP (USD bn)||365||381||394||362||–|
|Economic Growth (GDP, annual variation in %)||6.8||4.7||3.1||3.8||3.0|
|Consumption (annual variation in %)||-18.9||-1.6||25.3||-13.1||11.7|
|Investment (annual variation in %)||13.2||11.5||8.3||4.3||2.3|