Real economic growth in the UAE exhibited year-on-year (Y-o-Y) growth of 2.2 per cent in the second quarter (Q2) of 2019, lower than in the previous quarter, said the Central Bank of the UAE estimating that the national economy is expected to grow 2.4 per cent during the year, driven by faster growth in the non-oil sector, according to a report.
The Emirates News Agency (WAM) reported that non-oil GDP growth is estimated to have grown from 0.3 per cent in Q1 to 1.5 per cent in Q2. However, oil GDP growth is estimated to have moderated from 12.4 per cent in 2019 Q1 to 4 per cent in 2019 Q2, the report mentioned citing the CBUAE's Quarterly Review.
The pickup in non-oil activities is reflected in the rise in the Purchasing Managers' Index, which reached an average of 58.2 in Q2 2019. Meanwhile, employment in the private sector increased Y-o-Y by 1 pc in Q2 2019, said the report.
Y-o-Y CPI inflation remained negative in the second quarter at -1.6 per cent due to negative inflation for both Tradables (-1 per cent) and Non-Tradables (-1.8 per cent). In addition to the fading impact of the VAT, tradable inflation declined due to low international inflation and an appreciating Dirham, while non-tradable inflation declined due to declining prices, particularly in housing.
In the second quarter of 2019, customer deposits at banks increased on a yearly basis led by a rise in government deposits. On the other hand, credit continued its growth, underpinned by healthy Financial Soundness Indicators (FSIs) that underline a sound and stable banking system.
According to the review, the IMF has revised global growth downward to 3.2 per cent for 2019 and to 3.5 per cent for 2020, due mainly to sluggish growth in developed economies amid trade wars, low productivity growth, and rising market volatility; all these factors are having ripple effects on emerging economies.
Growth is expected to decline this year to 2.6 per cent in the US, 1.3 per cent in both the Eurozone and the UK, and 4.1 per cent in Emerging and Developing Economies, albeit projected growth remains relatively high in China (6.2 per cent) and in India (7 per cent).