Inflation is likely to “remain contained” in the Gulf Cooperation Council (GCC) countries before gradually declining “as commodity prices settle”, according to the International Monetary Fund (IMF).
Kristalina Georgieva, managing director of the IMF, told the Arab Fiscal Forum it was necessary to increase tax revenues to boost economic resilience.
She said improved long-term planning and investment was needed to address climate challenges, while multilateral cooperation was required to tackle unsustainable debt.
“Inflation in the region is also expected to gradually decline as commodity prices settle and tighter monetary and fiscal policies have their intended effect,” said Georgieva.
Also speaking at the forum, Mohamed Hadi Al Hussaini, minister of state for financial affairs for the UAE, said inflation, disrupted supply chains, geopolitical challenges, high food prices, and pressured financial conditions had increased the economic slowdown in GCC countries.
But he added: “The economic recovery is gaining momentum, thanks to the UAE’s early and strong response and the continuous macroeconomic policies.
“This is in addition to the strong reform efforts within the framework of the country’s 2050 strategy to encourage the private sector growth, promote non-oil growth, and attract foreign investment.”
In December 2022, the UAE promised to introduce a new corporate tax, which will be effective from 1 June 2023.
Al Hussaini said the measure would help achieve sustainability and stability of the federal budget and ensure growth rates are maintained.
He underlined the fact the UAE had been able to achieve 5.9% growth during 2022 compared to 4.7% in 2021, according to the World Bank.
The UAE’s non-oil GDP increased by 6.1% in 2022, and the volume of non-oil foreign trade rose to more than AED1tn in the first half of 2022.
Commercial and economic policies and initiatives meant the UAE ranked among the top 10 countries on more than 28 of the most prominent indicators of global competitiveness in 2022, he said.
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