Monday, June 22, 2015

Funding the future of R&D

The UAE government plans to triple its spending on research and development over the next six years and boost the national workforce by 185,000.

The targets were set in a note released last night by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.

The government plans to boost spending on research and development through 2021 to increase “knowledge economy” employment from 22 per cent of the workforce to 40 per cent, Sheikh Mohammed said.

Longer-term plans to grow and diversify the economy also include increasing the participation of Emiratis in the labour force by more than two thirds to 460,000 by 2021, Sheikh Mohammed said.

He said the government will continue to spend on large infrastructure projects this year to maintain growth after last year’s robust rate of expansion, when the UAE’s inflation-adjusted GDP grew 4.6 per cent.

Nominal GDP reached Dh1.47 trillion last year. The statement did not specify a target growth rate for this year.

However, this month the IMF forecast that the UAE’s non-hydrocarbon economy would grow by 3.4 per cent this year after its annual visit that included extensive talks with government officials.

The IMF economist Zeine Zeidane forecast that the government would this year post its first consolidated fiscal deficit since 2009 – 2.3 per cent of the GDP, compared to a 5 per cent surplus last year.

However, Sheikh Mohammed said yesterday “the country is set to continue to perform strongly this year”, adding that spending on infrastructure projects includes the Dh100 billion expansion of national airports, the Dh40bn building of the Union Rail Network plus other transport projects, new and improved tourist facilities, electronic infrastructure, real estate and financial services.

Government spending grew to Dh353bn last year and continues to rise, according to the statement, though it did not put a figure on this year’s spending.

The non-oil economy continued to grow at a faster clip than the economy as a whole, Sheikh Mohammed said, growing at 8.1 per cent last year and reaching nearly 69 per cent of the UAE’s GDP. The target is for non-oil to account for 80 per cent of the country’s economy by 2021.

Among individual sectors, financial services grew fastest last year, at 15 per cent, with transport and storage up 10 per cent, wholesale and retail up 8 per cent, and construction rising by more than 6 per cent.

Sheikh Mohammed also highlighted the need for GCC countries to integrate regional economies to ensure stability and growth.

“I am confident that the future of the Arab World is dependent upon realising a great developmental and economic revival, led by the Gulf states working in cooperation and achieved in cooperation with our brothers and friends,” he said, calling for a “clear and executable Arab economic vision”. -End-

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