The Washington-based IMF is likely to revise upwards its economic growth forecast for the UAE, according to Masood Ahmed, director, Middle East and Central Asia at the fund, speaking at the launch of the IMF’s annual regional economic outlook for the Middle East and North Africa (Mena) region in Dubai.

The fund currently forecasts the UAE’s real GDP growth to rise to 4.4 per cent in 2014 and 4.2 per cent in 2015.

Real GDP Growth
Country 2009 2010 2011 2012 2013 2014f 2015f
Algeria 1.6 3.6 2.8 3.3 2.7 4.3 4.1
Bahrain 2.5 4.3 2.1 3.4 4.9 4.7 3.3
Egypt 4.7 5.1 1.8 2.2 2.1 2.3 4.1
Iran 3.9 5.9 2.7 -5.6 -1.7 1.5 2.3
Iraq 5.8 5.5 10.2 10.3 4.2 5.9 6.7
Jordan 5.5 2.3 2.6 2.7 3.3 3.5 4.0
Kuwait -7.1 -2.4 6.3 6.2 0.8 2.6 3.0
Lebanon 10.3 8.0 2.0 1.5 1.0 1.0 2.5
Libya -0.8 5.0 -62.1 104.5 -9.4 -7.8 29.8
Morocco 4.8 3.6 5.0 2.7 4.5 3.9 4.9
Oman 3.3 5.6 4.5 5.0 5.1 3.4 3.4
Qatar 12.0 16.7 13.0 6.2 6.1 5.9 7.1
Saudi Arabia 1.8 7.4 8.6 5.8 3.8 4.1 4.2
Sudan 4.7 3.0 -1.2 -3.0 3.4 2.7 4.6
Syria 5.9 3.4 na na na na na
Tunisia 3.1 2.9 -1.9 3.6 2.7 3.0 4.5
UAE -4.8 1.7 3.9 4.4 4.8 4.4 4.2
West Bank/ Gaza 7.4 9.3 12.2 5.9 1.5 2.5 2.7
Yemen 3.9 7.7 -12.7 2.4 4.4 5.1 4.4
Source: IMF Regional Economic Outlook; May 2014

Yet, following a recent visit from an IMF delegation to the country, Ahmed said the forecast is likely to be revised upwards as the country’s economy grows, fuelled by a rapidly recovering real estate market.

Ahmed went on to warn that despite the strong growth forecasts, there is a risk the property market could overheat, with negative repercussions for the the country’s economy.

Despite measures taken by the UAE government and the central bank last year to curb speculative property buying, more needs to be done to prevent a real estate bubble from forming, according to Ahmed.

“Our own view is that these measures are good but if you look at what is happening in the market, it is time to consider stronger measures,” said Ahmed. “Particularly in terms of ways to discourage the quick turnaround or flipping of real estate in Dubai.”

He drew comparisons with other emerging markets such as Hong Kong and Singapore, where regulators impose fees on buyers who resell properties within a short period of time after purchase.

The IMF’s latest regional outlook also provides an update on growth in oil importing countries, which it says remains “tepid”, with high unemployment levels undermining the region’s stability.

“[It is] nowhere near the kind of growth rate you need to create an impact on high levels of unemployment that continue to be a source of social and political tension,” he said.

The need to implement structural economic reforms in these countries is growing increasingly urgent, he said, as the region grapples with rising fiscal deficits, debt and the political spillover from the conflict in Syria.

“[There is] no possibility for postponing some difficult reforms,” said Ahmed.

“They need to change the composition of spending and start financing investment rather than spending on subsidies,” he said, noting that some countries have started to do this.

Overall growth in oil importing countries stood at 3 per cent in 2013, according to the IMF, and has not yet caught up with the historical average of 5 per cent.