Dubai: Economic forecast from two leading banks such as Abu Dhabi Commercial Bank (ADCB) and Emirates NBD say the UAE’s economic outlook remains strong despite the recent sharp decline in oil prices
Our view remains that the non-oil economy is in the process of a cyclical upswing marked by broad-based growth,” said Monica Malik, Chief Economist of Abu Dhabi Commercial Bank.
Although weaker oil prices are expected dampen the fiscal and current account forecasts for 2015, economists see the overall growth to remain robust. “In the UAE’s case, the 2015 budget would run a surplus of 3.1 per cent of GDP even with a 3 per cent growth in total spending next year,” said Khatija Haque, Head of MENA Research at Emirates NBD.
Analysts see limited risks to the UAE’s investment plans from the recent fall in oil prices or from any further potential downside. ADCB has forecast that the UAE’s real non-oil GDP growth will accelerate to 5.6 per cent in 2014 and remain within the 5 to 6 per cent range during the 2014-2016 period. This is up from the average of 4.3 per cent realised between 2011 and 2013.
Consumer inflation has accelerated in 2014 with the pickup in economic activity, albeit remaining relatively contained at 3.1 per cent in October 2014. “Looking ahead, the stabilisation in residential real estate prices in the UAE since the second quarter suggests that inflationary pressure in the housing component should moderate in 2015,” said Haque.
Overall, economists do not expect a return of the same inflationary pressure seen during the 2005-2008 period. We expect a stronger dollar outlook as the US Federal Reserve starts to normalise monetary policy. Moreover, the strong dollar will partially help to maintain the UAE’s international purchasing power amid a backdrop of lower oil prices,” said Malik.