Dubai: The UAE At this point, resilient to the drop in oil prices, given a relatively diversified economy, excellent infrastructure, a more transparent and better regulated banking system, political stability, and ample foreign assets, said Garbis Iradian, Deputy Director of IIF.
The IIF expects monetary and fiscal policies to remain broadly accommodative. The consolidated fiscal balance is projected to remain in small surplus through 2016 given the UAE’s relatively low fiscal break even price of $74/bbl and external current account break even price of about $60/bbl in 2014.
The recent sharp increase in the power and water tariffs are expected to lower current public spending, while the real non-hydrocarbon GDP growth would remain strong at 4.8 per cent in 2015. The relatively low fiscal and external current account break-even prices of oil and ample foreign assets will enable the UAE to maintain its high level of spending on infrastructure and major projects and this will support growth in credit by banks. About $700 billion worth of infrastructure projects are expected to be implemented over the next 15 years.
Abu Dhabi is expected to continue to make significant investment in the oil and gas industries. The completion of major projects (including Dubai Metro and Al-Maktoum International airport in Jebel Ali) and the preparations to host the World Expo 2020 should keep growth in Dubai around 5 per cent in the coming years.
The UAE banks are amply capitalised, liquid, provisioned and with stable profits, reflecting prudent regulation by the central bank in recent years. The dollar peg is fairly secure. Unlike in 2009, there does not appear to have been any withdrawal of deposits from foreign institutions.
