RIYADH: Higher oil prices have dramatically improved the economic outlook of the Gulf countries, with the UAE’s 2022 forecast shifting from a 0.2 percent deficit to an 8.1 percent surplus, according to an IMF report.
This will see public debt slashed from 38.3 percent of GDP to just 31.7 percent. The current account balance, earlier forecast at a surplus of 9.4 percent of GDP, is now expected to be closer to 18.5 percent.
The UAE government’s oil receipts have gone from 480 billion dirhams ($131 billion) in late 2021 to 700 billion dirhams this year on account of the energy market disruption following the Ukraine-Russia war.
The UAE’s projected nominal GDP including energy price inflation increased by 17 percent, going from $428 billion to $501 billion, and its projected GDP growth rose from 3 percent to 4.2 percent this year.
Furthermore, non-oil business conditions improved as the UAE’s March Purchasing Managers’ Index, compiled by S&P–IHS Markit, held steady at 54.8 indicating expansion.
Still the UAE faces hikes in purchase prices, as cost pressures hit 40-month highs as a result of the war driven supply troubles.
The IMF projections this month are the highest in a decade, indicating further macroeconomic development and the capacity to regulate war led difficulties.
“This helps the country have a little bit of a war chest in case the Russia-Ukraine crisis begins to hit home a little harder than we expect,” said Scott Livermore, chief economist at Oxford Economics.
