Reference no: EM134255
The United Arab Emirates' economic growth is likely to slow to 2.3 percent this year from an estimated 4.9 % in 2011, as the Gulf country slowly consolidates fiscal policy, the International Monetary Fund said on Wednesday.
"The economic recovery looks set to continue. With limited potential for further increases in oil production in the near term, overall GDP growth is expected to moderate to 2.3 percent," the Fund said in a statement after concluding its annual consultations with the UAE.
The Fund's 2011 gross domestic product growth estimation is much stronger than 3.9 percent forecast by analysts polled by Reuters in December. The UAE's statistics bureau has yet to release 2011 GDP data.
Robust strong trade and oil prices flows with Asia have helped the second largest Arab economy recover from the 2009-2010 Dubai debt crisis, which exposed excesses in its property sector and led to a $25 billion debt restructuring at state-owned Dubai World.
The IMF warned, thus, that the uncertain global economic and financial environment posed risks to the outlook, and any renewed worsening of the global situation could make it more difficult for the UAE's government-linked companies to roll over some of their maturing external debt.
It said substantial progress had been made in the debt restructuring of state-linked entities, but that they still faced high refinancing needs and continued reliance on foreign funding.
UAE authorities' plans to gradually consolidate fiscal policy, after heavy spending during the debt crisis, are related, the IMF also said.
1. Summarize the articles with your own words,
2. Prepare a short explanation of the article using one of the subsequent economic models: GDP, AS and AD or circular flow of income.
3. Explain the economic situation in the UAE based on the article.
4. Check the right monetary policy that should be followed: contractionary or expansionary.
5. Describe why this monetary policy should be used.
6. Describe how this policy would impact the economy.
7. List and analyze the monetary policy tools that should be used.
8. How would these tools impact the economy?
9. Analyze how the information given in the article will impact the macroeconomic indicators. You should use two indicators: unemployment and output in your analysis.