United Arab Emirates Economic Forecast

United Arab Emirates Economic Outlook

October 2, 2018

Following a likely solid second quarter for the non-oil sector, the economy appears poised to be gaining steam in the third quarter. This is notably thanks to the increase of OPEC oil production targets in June as reflected by a noticeable increase in oil output in July and August. Furthermore, although the PMI softened somewhat in the same period—indicating waning momentum in the non-oil economy—a swath of recent reforms enacted throughout the Emirates should be starting to bear fruit in Q4 and beyond, further buttressing economic activity. The measures notably focus on making business easier and cheaper to conduct, as well as on attracting investment and skilled labor—for instance by making visas and business licenses easier to obtain. Job creation for now remains one of the weak points of the UAE economy, as seen by the fall in employment logged in the August PMI. However, resilient output growth suggests it could accelerate in coming quarters as backlogs of work continue to accumulate.

United Arab Emirates Economic Growth

Higher investment and public spending are likely to drive growth higher this year and next. Particularly, infrastructure investment related to the country’s preparation to host the 2020 World Expo will support the outlook, buttressing the construction sector. Furthermore, recent business-friendly reforms and a new investment law to be unveiled in Q4—which will authorize complete foreign ownership of firms in select sectors—are poised to boost investor confidence and support higher FDI inflows. Finally, the country should benefit from a robust tourism sector, particularly in Dubai, and rising oil production amid high global demand. Met the why particular panelists expect GDP to increase 2.4% in 2018, before accelerating to 3.0% in 2019, which is down 0.1 percentage points from last month’s forecast.

United Arab Emirates Economy Data

20132014201520162017
Population (million)9.09.39.69.911.1
GDP per capita (USD)43,19143,33537,37535,378-  
GDP (USD bn)390113358349-  
Economic Growth (GDP, annual variation in %)5.83.33.83.01.5
Consumption (annual variation in %)5.212.3-19.1-11.3-  
Investment (annual variation in %)-5.711.94.32.3-  
Industrial Production (annual variation in %)3.60.96.84.3-  
Unemployment Rate2.82.42.11.61.7
Fiscal Balance (% of GDP)8.41.9-3.4-2.5-1.8
Public Debt (% of GDP)15.715.518.720.7-  
Money (annual variation in %)22.87.95.53.34.1
Inflation Rate (CPI, annual variation in %, eop)1.43.13.61.22.7
Inflation Rate (CPI, annual variation in %)1.12.44.11.62.0
Policy Interest Rate (%)1.001.001.001.001.75
Exchange Rate (vs USD)3.673.673.673.673.67
Exchange Rate (vs USD, aop)3.673.673.673.673.67
Current Account (% of GDP)18.313.34.72.4-  
Current Account Balance (USD bn)71.253.616.78.4-  
Trade Balance (USD billion)11111876.668.3-  
Exports (USD billion)371343300299-  
Imports (USD billion)231235224230-  
Exports (annual variation in %)3.2-7.6-12.4-0.6-  
Imports (annual variation in %)5.91.7-4.62.9-  
International Reserves (USD)68.278.493.985.4-  
External Debt (% of GDP)44.348.360.862.2-  

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United Arab Emirates Facts

ValueChangeDate
Exchange Rate3.670.0 %Oct 18
Stock Market0.30.75 %Oct 18

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