UAE Economy Hit By Low Crude Oil Prices, Unlikely To Grow Over 3% In 2016

UAE Economy Hit By Low Crude Oil Prices, Unlikely To Grow Over 3% In 2016

$OIL

Crude Oil prices touched multi-year lows in Y 2016

The United Arab Emirates (UAE) might be unable to post economic growth of more than 3% in Y 2016 as low Crude Oil prices continue to drag on revenues, the Economy Minister says.

“It is a challenge, not only for us, for everyone. It all depends on what will happen to prices of Crude Oil as we move on,” said Sultan bin Saeed al-Mansouri saying Thursday.

Mr. Mansouri has previously said that the government’s expectations for growth had fallen to 3% because of the drop in oil prices.

Oil prices, which touched multi-year lows this year, have hit the country’s economic growth. Brent crude is currently hovering between 30- 35 bbl, compared to highs of around 114 in mid Y 2014.

In a recent report, the Institute of International Finance estimated that the UAE would grow 2.5% this year and post a fiscal deficit of 8%.

That’s lower than the International Monetary Fund’s (IMF) forecast of 2.6% growth and a 7.5% fiscal deficit.

Currently, Crude Oil revenues account for about 30% of the UAE’s GDP (gross domestic product), but officials hope to reduce that substantially by Y 2021 as diversification efforts gain ground.

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