Director of the IMF's Middle East and Central Asia department, said the UAE economy is benefiting from its role as one of the safe havens in the region and may record higher growth in 2014.
The International Monetary Fund on Tuesday said it may improve its economic outlook for the UAE this year due to better growth prospects ahead.
Masood Ahmed, director of the IMF's Middle East and Central Asia department, said the UAE economy is benefiting from its role as one of the safe havens in the region and may record higher growth in 2014. The fund forecasts a 4.4 per cent growth for the emirate this year.
"The oil-exporting nations including the UAE, Yemen and Algeria may see another year of robust economic activity driven by growth in non-oil sectors,” Ahmed said during a presentation to launch the regional economic outlook update for the Middle East and North Africa here on Tuesday.
He said GCC countries will drive the growth in the region due to broader activity in non-oil sectors. However, he warned that geopolitical tensions and the Russia-Ukraine crisis may impact the growth in the region.
"If there is sharp slowdown in Russia due to the increasing tension with Ukraine and possible economic sanctions, it will have a negative impact in the region. We have already reduced the growth prospects for Russia from 1.3 per cent to zero,” he said.
About the US Federal Reserve's tapering, he said it will not impact the GCC due to limited borrowing needs of the region.
Earlier, delivering his opening address, Dubai Economic Council secretary-general Hani Al Hamli said the Middle East offers strategic importance to the world economy. He attributed rich tributes to His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, for his policy initiatives on the economic front.
"The government initiatives on the Islamic economy, World Expo 2020 and Smart Government, among others, will put Dubai in better position for higher growth in years to come,” he said.
Ahmed hailed the various government initiatives to curb an abnormal hike in Dubai property prices and said authorities should consider stricter measures to discourage real estate speculation. "I think it is time to consider some stronger measures to check flipping and speculation in real estate sector,” he said.
Referring to Hong Kong and Singapore, which imposed 15 per cent and 30 per cent taxes, respectively, on property sales made within a year of purchase, the IMF director said the authorities in Dubai should adopt similar strict measures to check speculative transactions. "There is evidence that property prices in the emirate have been rising at a very rapid pace over the past 18 months,” he said.
Mohamed Lahouel, chief economist of Dubai's Department of Economic Development, at a panel discussion also echoed the same views and said that property prices are becoming "unrealistic”.
"It's important for Dubai to worry about the impact of speculative property transactions, and not aim for the maximum GDP growth rate,” he said.
Abdulla Hashim, senior vice-president of Digital Services at etisalat, who was also present at the event, said Dubai has developed an excellent infrastructure over a period of time and there is need to sustain this development for a longer period of time by stabilising the GDP growth rate.
Deutsche Bank chief executive for the Middle East and North Africa Askok Aram, who was also part of the panel, said global markets are positive on the Gulf region and it is evident in recent bonds launch activity including the 15-year bond issued by the Government of Dubai.
"Investors across the globe have a strong view towards the GCC region due to massive infrastructure spending and growth prospects. Investors from US, Europe, Japan, China and Korea are trying to develop close contacts in the GCC region.”
He said there is a shift in economic activity from West to East as 70 per cent of GCC oil is going to Asian powerhouses — China, Japan, Korea and India. "Most of the ships are moving towards the east as the Asia and Gulf region is engaged in close cooperation in the hydrocarbon sector.”
Source: Khaleej Times