The Institute of International Finance (IIF) expects that the UAE government’s decision to liberalise energy prices will save two per cent of the country’s GDP, the equivalent of AED25.69 billion.
Garbis Iradian, deputy director for Africa and the Middle East at IIF, expects that cutting subsidies and letting fuel prices rise will boost UAE state finances by adding 2.5 per cent to the GDP, reports UAE-based Aliqtisadi.
He says that the rising prices of petroleum products, along with the development of the public transport system in the state, will reduce domestic demand for petroleum products.
Iradian predicts the decision to contribute to strengthening the balance of payments of the state, with a high amount of fuel available for export, thus increasing oil export revenues.
He says it is likely that the current account surplus of the state will reach AED69.73bn this year.
He notes that, as a result of the rise in gasoline prices, the average inflation in consumer prices in the country will rise by roughly 0.8 per cent this year, reaching 4.5 per cent instead of the previously expected 3.7 per cent.