Economy to grow faster than IMF forecast: UAE Central Bank

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A pedestrian walks past the United Arab Emirate’s central bank in Abu Dhabi. Photo – Matilde Gattoni/Bloomberg

The Central Bank of the United Arab Emirates said the federation’s economy has shown “sustained resilience” and is likely to grow faster than the International Monetary Fund forecast for this year.

The apex bank said in its first “financial stability review” that the UAE’s economy, apart from oil receipts, may grow by up to 4%. The IMF had expected non-oil economic growth of 3.5% this year.

The growth is attributed to improved growth in the commercial hub Dubai and the capital Abu Dhabi, and increased public spending in the less well-off northern emirates.

The United Arab Emirates central bank also said that banks operating in the country are well-equipped to deal with major stress scenarios and contingencies.

The central bank also said that inflation would remain moderate in line with the IMF’s estimate of 1.5% for the year.

In its inaugural financial stability review, the Abu Dhabi-based monetary watchdog said that since banks are finalising major debt restructuring deals with various entities, their non-performing loans will likely increase to reflect new terms and conditions, and peak around an average of 8-9% compared with a ratio of 7.2% at the end of 2011.

The seven-state federation is the Arab world’s second largest economy whose economy is driven by trade and services such as banking and tourism, besides oil exports.

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