UAE’s GDP is forecast to grow at 3.6% this year, as the economic outlook is still positive, bolstered by robust domestic activity.

This is according to a statement by the International Monetary Fund (IMF) published on Monday. 

In addition, non-hydrocarbon GDP is predicted to rise by 3.8% thanks to ongoing tourism activity and a boost to capital expenditure. 

That said, there are considerable global uncertainties that may impact the outlook, such as sluggish growth, geopolitical developments and tighter financial conditions. 

The IMF added that medium-term growth could be affected by enhanced UAE reform efforts and highlighted the importance of ongoing efforts to boost fiscal transparency, governance and accountability by publishing general government, the emirate and federal level fiscal data, Khaleej Times reports.

The report also showed that inflation in the UAE has risen with global trends but will likely ease to 3.4% in 2023. 

Furthermore, fiscal and external surpluses are forecast to remain high as a result of increased oil prices, the IMF stated, going on to say that banks are sufficiently capitalised and liquid overall, Zawya reports. 

However, non-performing loans are still high, despite having reduced from recent peaks, whilst real estate prices have risen steeply in certain segments. 

The International Monetary Fund said that development in Comprehensive Economic Partnership Agreements (CEPAs) would bolster trade and incorporation in global value chains and attract foreign direct investment. 

“Although overall bank balance sheets remain healthy, continued close monitoring of financial stability risks and further strengthening of macroprudential frameworks is warranted, including given the high level of non-performing loans, tightening financial conditions, and banks’ exposures to the real estate sector,” the IMF board stated.