United Arab Emirates Economic Forecast

United Arab Emirates Economic Outlook

June 5, 2018

The economy gained steam in the first quarter, largely thanks to higher oil price that buoyed the hydrocarbon sector, despite constrained output from the OPEC agreement. This welcome boost more than offset a slight slowdown in the non-oil economy, which had to adjust to the implementation of VAT in January. Looking at Q2, the VAT-induced slowdown is likely to subside, with PMI data showing an improvement in April, while oil prices dynamics still look positive following the U.S. exit from the Iran nuclear deal. Furthermore, on 20 May, the government approved a new 11-year visa to attract investors and skilled professionals, as part of its comprehensive strategy to modernize and diversify the economy away from oil. This should reinvigorate the residential housing market, which has been tumbling in past years.

United Arab Emirates Economic Growth

Investment should be the main driving force in the non-oil economy this year. A large infrastructure push from the government, particularly in Dubai in the run-up to the Expo 2020, should carry private investment momentum. In addition, a flurry of new measures including 11-year visas and a reform—to be introduced in Q4—authorizing 110% foreign ownership in some sectors are expected to boost FDI inflows further. Meanwhile, higher tourist inflows will likely buttress private consumption growth. An escalation of regional tensions could, however, put a lid on this positive momentum. Met the why particular panelists expect GDP to increase 2.7% in 2018, which is unchanged from last month’s forecast, and 3.2% in 2019.

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 %Jun 14
Stock Market0.40.75 %Jun 13

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