The Washington-based IMF says that economic growth in the UAE is expected to strengthen over the next few years due to higher oil prices, increased government spending, and stronger private credit growth.

Overall growth is projected to strengthen to 2.9 per cent this year and 3.7 per cent in 2019. Inflation is expected to be 3.5 per cent this year owing to the introduction of the value-added tax, though it should ease afterwards.

The comments came as the fund concluded its 2018 Article IV mission to the UAE. It added that the government’s fiscal easing is warranted in the near term, although once the economic recovery gains momentum, a return to a path of gradual and growth-friendly fiscal consolidation would ensure sufficient savings for the future.