United Arab Emirates Economic Forecast

United Arab Emirates Economic Outlook

February 5, 2019

Growth in the non-oil economy was likely broadly robust in the fourth quarter but nevertheless softened noticeably in December, when the PMI fell to an over two-year low on the back of weaker external demand. Meanwhile, although oil prices plunged in the quarter—which likely hit fiscal revenues in turn—oil production increased significantly in the same period, which bodes well for GDP growth in Q4. The December slowdown was also likely temporary, as indicated by still-upbeat business confidence in the month. Looking ahead, fiscal stimulus measures—both at the federal and emirate level—should support economic activity in Q1 and beyond. On 1 February, the IMF released its Article IV consultation report, in which it praised the country’s sound fiscal management and recent reforms to liberalize investment flows.

United Arab Emirates Economic Growth

Although the economy remains relatively sensitive to oil market fluctuations, prospects appear promising this year. A strong dose of fiscal stimulus and the ongoing infrastructure investment push related to the preparation of Expo 2020—which will notably buttress the construction sector—should drive momentum. The recent landmark investment law, relaxation of visa rules and other business-friendly reforms also all appear poised to both attract qualified foreign workers and to significantly boost FDI inflows. Nevertheless, slower global growth, trade protectionism and financial volatility constitute important downside risks. Met the why particular panelists expect GDP to increase 3.0% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.4% in 2020.

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 %Feb 14
Stock Market0.30.75 %Feb 12

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