An IMF mission has visited the UAE for its annual Article IV discussions. At the end of the mission the IMF said the UAE will run a fiscal deficit for the first time since 2009, and economic growth for 2015 is expected to be 3.4 per cent.

“…with the decline in oil prices, the fiscal balance this year is projected to turn negative for the first time since 2009 to record a deficit of 2.3 per cent of GDP, and fiscal expansion over the last few years has increased vulnerability to oil prices and moved the fiscal position away from the level consistent with inter-generational equity. The current account surplus is also projected to decline substantially, to 4.1 percent of GDP,” said Zeine Zeidane, who led the IMF mission to the UAE.

The decline in oil prices has also impacted growth, along with a subdued real estate market.

“The outlook for economic activity is expected to moderate with non-hydrocarbon growth projected at 3.4 per cent in 2015 amid lower oil prices and an appreciation of the real effective exchange rate,” said Zeidane. “Sales prices in the real estate market have stabilised, but increases in rents more than offset the dampening effect of US dollar appreciation on imported prices, pushing up inflation, which is expected to reach 3.8 per cent on average in 2015.”

The Article IV consultation will result in a report that will discussed by the IMF Executive Board tentatively scheduled for July 2015.

UAE Economy Minister Sultan bin Saeed al-Mansouri told MEED in late April that economic growth for 2015 would be 3.5 per cent. “I have mentioned some [growth] figures before, and it depends of course on what happens with oil prices because 30 per cent of the GDP of the UAE still comes from oil, but if I put my finger on one figure for now, it is 3.5 per cent,” he said.