Identify the right fiscal policy that should be followed

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Reference no: EM13754314 , Length:

Part -1:

Article: IMF sees UAE GDP growth slowing to 2.3 pct in 2012

1. Summarize the articles with your own words.

2. Which stage in the business cycle do you think the economy is in?

3. Give two reasons to defend your chosen business cycle.

4. Identify the right fiscal policy that should be followed: contractionary or expansionary.

5. Explain why this fiscal policy should be used.

6. Explain how this fiscal policy would impact the economy.

7. Analyze how the information provided in the article will impact the macroeconomic indicators. You should use two indicators: output and unemployment in your analysis.

8. Follow the below instructions within your writing the project.


Part -2:

IMF sees UAE GDP growth slowing to 2.3% in 2012 ABU DHABI,

The United Arab Emirates economic growth is expected to slow to 2.3 percent this year from an estimated 4.9 percent in 2011, as the Gulf country gradually 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 CDP 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 estimate 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 oil prices and strong trade 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, however, 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 appropriate, the IMF also said.

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Reference no: EM13754314

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