MANAMA: The UAE’s economy continues to focus on the non-oil sector as the sector expands gradually as against a contracting oil sector, which according to the Minister of Economy, currently accounts for less than a third of UAE’s GDP, according to KAMCO GCC Economic Quarterly report released on Sunday.
Nevertheless, due to the still sizeable contribution from the oil sector, in January the IMF lowered its growth projections for UAE’s economy from 4.5% to 3.5% for 2015 and from 4.4% to 3.5% for 2016, implying a constant rate of growth during 2016 due to lower oil production.
It is pertinent to note that the previous estimate of 4.5% growth for 2015 was based on higher oil output. According to the new estimates, Dubai expected to grow by 4.5% in 2015 and 4.6 %in 2016 whereas Abu Dhabi is expected to grow at about 3% for both the years.
Meanwhile, manufacturing data for the non-oil private sector for March highlighted further slowdown as the HSBC UAE PMI slid to a 17-month low level of 56.3 points as output and new orders expanded more slowly. Moreover, on the price front, competition among suppliers led to the first monthly fall in input costs in five years since March 2010.
On the capital front, total credit facilities further improved to Dh1.22 trillion at the end of the Q4 of 2014, an increase of 3.7%. Personal facilities increased by 6.7% whereas trade and construction facilities increased by 10.7% and 6.9%, respectively.
In terms of price levels, the economy witnessed a significant drop in quarterly inflation to 0.26% for Q4-14 as compared to 1.45% in Q3-14. Price level continued to decline during 2015 as reflected in the HSBC PMI index.