UAE Needs Prioritized Stimulus, Reforms for Growth, IMF Says
(Bloomberg) -- The United Arab Emirates should prioritize new fiscal stimulus and structural reforms to ensure sustainable economic growth, the International Monetary Fund said, as the Gulf Arab state prepares to wind down its pandemic-related support measures.
The new reforms should target attracting highly skilled professionals, supporting private sector employment, and increasing trade and foreign investment, the IMF said in a report Thursday. “Going forward, however, support measures should be increasingly targeted to viable sectors and firms and supporting people most in need,” it said.
The UAE’s economy has been recovering and is expected to rally further after Dubai opens its $7 billion World Expo on Friday. Dubai, which is part of the UAE, derives a third of its economy from sectors such as hospitality and wholesale and retail trade, so the launch of the coronavirus-delayed Expo will provide a boost.
“A gradual recovery is expected in 2021,” the IMF said citing a “strong” health response and supportive macroeconomic policies as well as the rebound in tourism and domestic activity related to the delayed Expo 2020. Despite the global and local uncertainty around the economic recovery, “the UAE’s strong reform momentum provides an upside risk to growth,” it said.
As the economy improves, the government is expected to pare its pandemic-related stimulus. Budget spending in the oil-rich Gulf country is estimated at 58 billion dirhams ($15.8 billion) this year, 3 billion dirhams less than in 2019, before the coronavirus threw global spending plans into turmoil.
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