Khaleej Times, Thu, Apr 18, 2024 | Shawwal 9, 1445
IMF projects UAE growth at 4.2% for 2025, highest in 3 years
Emirates:
The International Monetary Fund (IMF) on Tuesday projected higher growth for the
UAE economy for next year than in 2023 and 2024, the highest in three years.
The World Economic Outlook released by IMF predicted 4.2 per cent GDP growth for
2025 as compared to 3.5 per cent for 2024 and 3.4 per cent for last year. In
2022, the UAE economy grew 7.9 per cent, bouncing back after the Covid-19
pandemic.
In the post-pandemic era, the UAE’s economy is being mainly driven by confidence
in its policies, attracting talent and foreign direct investment from around the
world in key sectors, especially real estate, travel and tourism and retail
sectors. In addition, high oil prices are also supporting the growth of the
economy.
However, the IMF reduced UAE’s GDP growth outlook for 2024 by half a per cent
from 4.0 per cent in October 2023 to 3.5 per cent in the latest forecast.
The IMF projected higher growth for most of the oil exporting nations for next
year as global geopolitical tensions from the Russia-Ukraine crisis to the
Iran-Israel conflict kept the oil prices higher due to disruption fears.
GCC growth projection (%)
Economy 2023 2024 2025
UAE 3.4 3.5 4.2
Saudi Arabia -0.8 2.6 6.0
Bahrain 2.6 3.6 3.2
Qatar 1.6 2.0 2.0
Kuwait -2.2 -1.4 3.8
Oman 1.3 1.2 3.1
Major economies growth projection (%)
Economy 2023 2024 2025
USA 2.5 2.7 1.9
Europe 1.4 1.6 2.0
UK 0.1 0.5 1.5
Russia 3.6 3.2 1.8
Japan 1.9 0.9 1.0
India 7.8 6.8 6.5
China 5.2 4.6 4.1
Pakistan -0.2 2.0 3.5
Source: IMF
Recession avoided
The IMF said in its World Economic Outlook’s April 2024 edition that despite
many gloomy predictions, the world avoided a recession, the banking system
proved largely resilient, and majoremerging market economies did not suffer
sudden stops.
Moreover, the inflation surge — despite its severity and the associated
cost-of-living crisis — did not trigger uncontrolled wage-price spirals.
“Instead, almost as quickly as global inflation went up, it has been coming
down,” it said.
According to IMF’s latest projections, growth for 2024 and 2025 will hold steady
at around 3.2 per cent, with median headline inflation declining from 2.8 per
cent at the end of 2024 to 2.4 per cent at the end of 2025. Most indicators
point to a soft landing.
“Even more encouraging, we now estimate that there will be less economic
scarring from the pandemic — the projected drop in output relative to
pre-pandemic projections — for most countries and regions, especially for
emerging market economies, thanks in part to robust employment growth.
Astonishingly, the US economy has already surged past its pre-pandemic trend,”
IMF said.
It said China’s economy is affected by the enduring downturn in its property
sector.
“Domestic demand will remain lacklustre for some time unless strong measures and
reforms address the root cause. Public debt dynamics are also of concern,
especially if the property crisis morphs into a local public finance crisis.
With depressed domestic demand, external surpluses could rise. The risk is that
this will further exacerbate trade tensions in an already fraught geopolitical
environment.”