The economy of the UAE is expected to grow by three per cent this year.
HE Mubarak Rashid Khamis Al Mansoori, governor of the UAE central bank, said on Monday that the Emirates will reconsider any investments deemed unnecessary, reports Reuters.
The country has focused on pursuing diversification within its investments, aiming to diversify its economy, especially following the slump in oil prices. The sixth-largest producer of oil in the world sources more than 60 per cent of the federal budget from hydrocarbon revenues.
“The government is still continuing with its spending, though it will rationalise any unnecessary investments,” Al Mansoori explained to reporters at the Middle East Banking Forum, held on November 16 at Jumeirah Beach Hotel in Dubai.
Earlier this year, the central bank had said that the UAE government was expected to trim state spending by 4.2 per cent as a result of the reduced revenue stemming from lower oil prices, reported Reuters.
Meanwhile, earlier this year, the Economist Intelligence Unit (EIU), revealed that it expects the UAE economy to grow by approximately 3.6 per cent from 2015 to 2019, as a result of the positive activity from the oil and non-oil sectors in the Emirates.
GDP on the rise
As a result of this, EIU also predicts that the UAE real GDP growth will increase up to 3.2 per cent between 2015 and 2030, as well as approximately 2.5 per cent from 2015 to 2050.
Meanwhile, Sultan Saeed Nasser Al Mansoori, the UAE’s Minister of Economy, explained that the UAE’s GDP will grow between three and 3.5 per cent to reach AED1.5 trillion in 2015, at the opening plenary of the World Economic Forum’s Global Agenda Council meeting in Abu Dhabi in October.
In his speech, the minister underlined the UAE’s achievements in building a knowledge economy and said that the government is aiming to make the country among the most innovative societies in the world by 2021.
A focus on human capital was the central premise of the UAE’s national innovation strategy, Al Mansoori added, stressing that this was a critical pillar of the country’s vision as a diversified economy.
Cut in budget
The UAE’s cabinet approved a zero-deficit draft federal budget of AED48.5 billion for 2016, down by 0.5 per cent from last year’s AED49.1bn figure.
The UAE’s federal budget accounts for only 14 per cent of overall fiscal spending in the Emirates, according to estimates. Meanwhile, on a consolidated basis, the dip in oil prices is expected to result in the UAE posting its first overall fiscal deficit since 2009, as opposed to a five per cent surplus in 2014.
This article first appeared on AMEinfo’s sister publication kippreport.com