DUBAI: The United Arab Emirates (UAE) economy, the Arab world’s second largest, is recovering at a solid pace from the global financial crisis but remains threatened by low oil prices, the International Monetary Fund (IMF) said on Wednesday (Thursday in Manila).
“Economic recovery has continued at a solid pace, supported by construction, logistics and hospitality,” a team from the International Monetary Fund said after visiting the Gulf country.
Growth was underpinned by ongoing public projects in oil-rich Abu Dhabi and continued strength in Dubai’s services sectors, it said in a statement.
UAE, the fourth largest Organization of the Petroleum Exporting Countries (OPEC) supplier, was hit hard by the global financial crisis, strongly dampening economic growth, which averaged just 1.5 percent between 2007 and 2011.
The IMF projected the UAE economy would grow 4.25 percent this year, down from 5.2 percent in 2013 with non-oil growth forecast at 5.5 percent.
The decline in oil prices, if sustained, could have a significant impact on revenues, the IMF warned, adding, however, that the UAE had sufficient fiscal buffers to minimize the fallout.
The IMF welcomed stable real estate prices in Dubai as sales in summer moderated.
“The slower momentum in the market is welcome news following a period in which prices had increased at a fast pace,” it said.
Dubai and its government-related entities (GREs) have continued to improve their debt profiles after the major debt restructurings from the 2008-2009 crisis, the IMF said, adding that several GREs had begun to make early repayments.
While debt levels for some GREs remained significant, stronger financial positions and lengthened maturity profiles had further reduced debt-related risks.
Dubai said this week it has repaid $1.93 billion raised from Islamic bonds known as “sukuk” and renewed its commitment to pay back billions of dollars worth of debt on time.
In August, the emirate’s real estate giant Nakheel repaid all of its $2.15 billion bank debt almost four years ahead of schedule.
Dubai in March managed to delay for another five years the repayment of $20-billion worth of debt it received from Abu Dhabi that had been due to mature this year.