Non-oil industries growing steadily as UAE economy continues to diversify
Growth in other sectors expected to hit 3.3 per cent after widespread investment
Non-oil growth in the UAE will hit 3.3 per cent this year, according to forecasts by the International Monetary Fund (IMF), as the country continues to successfully diversify its economy.
Overall growth is expected to be only 1.3 per cent because of lower oil production, but widespread investment in non-oil sectors is clearly paying off.
"The UAE is adjusting well to the new oil market realities. Its large financial buffers, diversified economy and the authorities’ robust policy responses are facilitating the adjustments while safeguarding the economy and the financial system,” said Natalia Tamirisa, head of the IMF mission to the UAE.
Consumer goods saw the highest employment growth of any UAE industry in the first quarter of 2017, suggesting that other sectors are capable of picking up the slack during the slowdown in oil production.
Earlier this year, recruiters were predicting a boom in hiring in banking and finance – partly a result of the Government Accelerator programme to boost the hiring of nationals.
However, the purchasing managers’ index (PMI) – an indicator of the economic health of the manufacturing sector – levelled off after hitting a 19-month high in March.
“The PMI shows that while overall activity was firm going into the second quarter, organisations are still facing significant challenges as job creation remains subdued and pricing power is limited,” Tim Fox, head of research and chief economist at Emirates NBD told The Khaleej Times.
Spending on infrastructure is set to grow steadily in 2017, after the government reduced spending during the previous two years in response to the low price of oil. This could mean increased hiring in the construction and energy industries, in particular. The introduction of VAT next year will also create extra tax revenue.