United Arab Emirates Country Risk Report Q3 2018
The UAE will be one of Middle East's economic outperformers over the next decade. Its diversified economy and solid operational framework will see exports and investment continue to drive growth. It will also benefit from the 2020 Expo in Dubai, which will result in sustained investment inflows in the country's infrastructure.
Well-diversified Dubai will continue to outperform Abu Dhabi, whose economy will remain affected by the OPEC-stipulated oil production cuts throughout 2018.
Rising oil prices will support government revenues in the years ahead, enabling a return to surpluses this year. That said, continued spending on infrastructure projects and social services will somewhat limit these improvements.
We forecast inflation to tick up in 2018, driven by the introduction of VAT and by rising transportation costs. This will prompt the central bank to tighten monetary policy in line with the US Federal Reserve.
We maintain a favourable outlook for political stability in the UAE, owing to a small and affluent indigenous population, limited sectarian tensions and low risks of succession. Meanwhile, we expect foreign policy assertiveness to continue.
Executive Summary Core Views Major Forecast Changes Key Risks Chapter 1: Economic Outlook SWOT Analysis BMI Economic Risk Index Economic Growth Outlook Growth Picking Up As Oil Price Gains Spur Confidence Abu Dhabi Economic Growth Outlook Oil To Drive Economic Rebound Dubai Economic Growth Outlook Growth Accelerating On Expo 2020 And Improving External Conditions GDP By Expenditure Outlook TABLE: GDP GROWTH FORECASTS TABLE: PRIVATE CONSUMPTION FORECASTS TABLE: GOVERNMENT CONSUMPTION FORECASTS TABLE: FIXED INVESTMENT FORECASTS TABLE: NET EXPORTS FORECASTS Fiscal Policy And Public Debt Outlook Oil Gains Will Facilitate Return To Budget Surplus In 2018 Structural Fiscal Position TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES, 2015 TABLE: FISCAL AND PUBLIC DEBT FORECASTS Monetary Policy Framework TABLE: MONETARY POLICY FORECASTS Outlook On External Position TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE TABLE: BREAKDOWN OF IMPORTS IN 2016TABLE: BREAKDOWN OF EXPORTS IN 2016 TABLE: CURRENT ACCOUNT BALANCE FORECASTS Chapter 2: 10-Year Forecast The UAE Economy To 2027 Greater Caution, Slower Growth TABLE: LONG-TERM MACROECONOMIC FORECASTS Chapter 3: Political Outlook SWOT Analysis BMI Political Risk Index Domestic PoliticsNew Investment Regulations Offer Tailwinds For Diversification TABLE: POLITICAL OVERVIEW Long-Term Political Outlook Stable Outlook, But Challenges Remain Chapter 4: Operational Risk Operational Risk TABLE: OPERATIONAL RISK SCORES Business Crime TABLE: BUSINESS RESPONSE TO RISK IN THE UAE Education TABLE: UAE AND OECD AVERAGE STUDENT PERFORMANCE SCORES, 2015 Chapter 5: BMI Global Macro Outlook Key Divergences Emerging In World Economy TABLE: GLOBAL MACROECONOMIC FORECASTS TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y TABLE: UNITED ARAB EMIRATES – MACROECONOMIC DATA & FORECASTS