The United Arab Emirates expects its economy to grow 2.4 percent in 2019, driven by faster growth in the oil sector, the central bank said in a report on Sunday.

 

The economy grew 1.7 percent in 2018, according to preliminary data released by the government.

 

The central bank’s forecast is more cautious than the International Monetary Fund projection of 2.8 percent growth in 2019, supported by public spending as well as external factors.

 

The bank expects the oil sector to grow 5 percent in 2019, compared with 2.8 percent in 2018, while the non-oil sector will grow 1.4 percent, slightly faster than 2018.

 

The report also said the economy posted estimated growth of 2.2 percent in the second quarter compared to a year earlier, with non-oil real GDP up 1.5 percent.

 

“Improved outlook for growth is due to expected rising public and private spending at the Federal and Emirate levels, higher investment ahead of the highly anticipated Expo 2020 and continued regional economic recovery, in light of the monetary policy easing in the U.S.,” the central bank said.

 

Total government expenditure in the United Arab Emirates rose to 119 billion dirhams ($32.40 billion) in the first quarter of this year, the report said.

 

The oil sector is expected to grow, despite recent moves by oil producing nations to cut output, as the UAE benefits from Abu Dhabi National Oil Co’s investment in value-added goods and services by more than 400 billion dirhams over five years, it said.

 

Employment in the private sector increased by 1.0 percent in the second-quarter of 2019 from a year earlier compared to an increase of 0.1 percent in the previous quarter, it said.