Inflation is expected to stand at 3.6 percent for the year The UAE has managed to diversify 77 percent of its economy in the aftermath of the fall in oil prices that began in 2014 DUBAI: The UAE economy is forecast to grow 4.2 percent in 2019, while the Emirate’s non-oil economy is expected to expand by 3.7 percent for the same year, the country’s central bank governor said on Tuesday. “We tend to believe that Q3 GDP would be 3.1 (percent), non-oil GDP would be 3.3. We are hoping to close the year at 2.8 percent for the GDP and 3.3 percent for non-oil GDP and this is really coming from 2.5 percent in 2017,” Central Bank Governor Mubarak Rashed Al-Mansoori said during a speech at the MENA Financial Summit in Abu Dhabi, as reported by Zawya. Last month, the International Monetary Fund said that the UAE’s economy was expected to grow by 2.9 percent this year and 3.7 percent next year. The UAE Cabinet has announced last month a 17.3 percent increase in its federal budget spending for 2019, up to a predicted 60.3 billion dirhams ($16.4 billion), from 51.4 billion dirhams that was approved for 2018. The cabinet also announced that a forthcoming three-year federal budget would not run at a deficit. Al-Mansoori added that inflation is expected to stand at 3.6 percent for the year. “Due to the implementation of VAT, there is a one-time effect. So, we started in January at a high level but we have been declining ever since,” he said. Inflation rose to 2.7 percent in January, from 1.5 percent the previous month, after a new 5 percent value-added tax was imposed on a majority of consumer products and services. Al-Mansoori said inflation stood at 3 percent in September. The UAE’s central bank chief also said that banks’ lending to the private sector had been “soft” at the beginning of this year, but has subsequently increased by 6.5 percent. "In terms of our lending to the private sector, which I am sure a lot for journalists would like to see, we were soft at the beginning of the year but now we are starting really to pick up,” Al-Mansoori said. “The private sector is really a key sector for the UAE and for future growth,” he added. The UAE introduced a new debt law last month. The new regulation will allow the government to start issuing sovereign bonds in the local currency. The governor said the UAE has managed to diversify 77 percent of its economy in the aftermath of the fall in oil prices that began in 2014. He praised the country’s move to cut subsidies and implement other reforms to combat the drop in oil prices.