United Arab Emirates: 2024 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, December 5, 2024
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- United Arab Emirates: 2024 Article IV Consultation-Press Release; and Staff Report
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Bibliographic details
- Published: December 5, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400293245.002
Overview
- Economic growth remains strong, driven by robust domestic activity.
- Non-hydrocarbon growth has benefitted from healthy tourism flows and increased activity in the construction, manufacturing, and financial services sectors.
- Strong capital inflows reflect commodity revenue, safe haven flows, and investment drawn by social and business-friendly reforms.
- Central bank foreign reserves have been boosted and surplus domestic liquidity has increased.
- Bank balance sheets have strengthened further, with capital buffers well above regulatory minima.
- Credit has continued to grow despite policy interest rate hikes.
- Large sovereign buffers help mitigate vulnerabilities.
Macroeconomic performance and drivers
- Growth is supported by robust domestic activity.
- Non-hydrocarbon sectors cited: tourism, construction, manufacturing, financial services.
- Capital inflows drivers: commodity revenue, safe haven flows, reforms that attract investment.
Financial sector and buffers
- Central bank foreign reserves have been boosted.
- Domestic liquidity is in surplus.
- Bank balance sheets have strengthened further.
- Capital buffers are well above regulatory minima.
- Credit growth has continued despite policy interest rate hikes.
Risks, scenarios, and vulnerabilities
- The outlook is subject to uncertainty and external risks.
- Potential adverse scenarios identified:
- Intensification of geopolitical tensions and geoeconomics fragmentation could reduce flows of goods, capital, and tourism.
- An abrupt global slowdown could reduce external demand.
- A sharp correction in global asset prices could undermine financial conditions.
- Commodity price volatility could affect revenues and capital flows.
- Large sovereign buffers are highlighted as mitigating factors against these vulnerabilities.
Content in this bundle
- 1areea2024001-print-pdf