(MENAFN- Khaleej Times) Dubai's growth numbers in the first six months of the year may help revise the overall economic growth of the UAE, which is up from four per cent, forecast the International Monetary Fund's (IMF) top regional director.
In an interview with Khaleej Times, on the sidelines of the World Economic Forum Global Agenda Summit in the capital, Masood Ahmed, director of the Middle East and Central Asia Department at IMF, said that the oil sector is growing a bit less and the non-oil sectors are growing a bit more.
"When you look at the most recent data coming in from Dubai, this data has been showing relatively high growth rates in the first six months, just over five per cent," he said.
"I am sure this would feed through the end-year numbers" I suspect that the number we will have for the UAE, which is four per cent, would end up being revised upwards."
Commenting on the UAE's decision to implement the US Foreign Accounts Compliance Act, Ahmed welcomed it, saying, "more and more countries are finding ways to cooperate to ensure that while on the one hand the privacy of citizens in terms of bank accounts is protected, at the same time information is shared in a way which does all that is required to minimise tax evasion and the financing of terrorism or money laundering."
As part of that effort, he thought it a good idea for countries to be able to share the necessary information. On rising inflation in the UAE, Ahmed said the recent devaluation of the Indian Rupee was not the reason, as it would result in lower prices in the US dollar, to which the Dirham is pegged. He said the prices of non-tradable items like rents have been a factor in the rise in inflation in the region.
On the taxation issue in the GCC, he said that at the moment, expenditure in many GCC countries has been rising rapidly and as a result break even prices for oil, which is a price at which their budgets are balanced, have risen in some countries. Bahrain, for example, already has a budget deficit because the break even price is higher than the current price.
Prices are also rising in a few other countries, so to build resilience in both their budgets and to ensure that they are saving enough for the future generations it is important to find ways to increase the level of savings, Ahmed noted. The director said savings can be boosted by trying to mobilise more revenues beyond the oil sector, but the other thing which can be looked at, is controlling the spending.
"In our view, the focus in near term will be more on the finding ways to control the growth of spending rather than to introduce new taxes," he said.
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