Country Forecast United Arab Emirates October 2014 Updater

Country Forecast United Arab Emirates October 2014 Updater



  • There will be little threat to domestic political stability in the UAE in the forecast period. Power in the emirates will be concentrated within the large ruling families, although relations within these families can sometimes be fractious. The northern emirates present a risk of unrest, as the wealth gap between Emiratis there and those in Abu Dhabi and Dubai has widened.
  • Popular demand for democracy from Emirati citizens appears to be minimal, in large part because of the country's energy wealth. However, in the light of events unfolding in the region since 2011, there may be more calls for increased political participation, although these will be suppressed quickly. The Economist Intelligence Unit does not expect significant steps towards a more participatory political system to be taken in 2015-19.
  • Diplomatic engagement between Iran and the West over the former's nuclear programme has become more constructive, with nuclear talks extended to November 24th. However, negotiations still face a number of obstacles and if they were to falter, tension in the region over Iran's nuclear programme would sharpen again. Meanwhile, the UAE is undertaking a more aggressive foreign policy, notably by participating in airstrikes against Islamic State in Syria.
  • The UAE will pursue an expansionary fiscal policy. Both Dubai and Abu Dhabi have announced the resumption of existing projects, as well as new developments. Continued expenditure growth, coupled with a forecast decline in oil prices, will result in a downward drift in the fiscal surplus during the forecast period. Nevertheless, we forecast that the surplus will average around 2.3% of GDP in 2015-19.
  • The government will continue to attract foreign investment by providing a broadly attractive business environment with low tax rates, imposing few trade or exchange controls, providing solid infrastructure and projecting a positive attitude to private-sector investment. The UAE's decision to build four nuclear reactors will also attract foreign investment.
  • We forecast that real GDP growth will average 4.1% in 2015-19. Growth will be driven largely by increased non-oil activity, supported by substantial investments in infrastructure and high incomes. We also expect expansion in oil production each year. Inflation is forecast to drift up over the forecast period, averaging 3%.
  • The large current-account surplus is forecast to narrow as imports rise, the services deficit widens and oil prices fall. We expect the current-account surplus to narrow from 16.1% of GDP in 2013 to under 2% of GDP in 2018-19.






Country Forecast United Arab Emirates October 2014 Updater
Country forecast overview: Highlights
Country forecast overview: Key indicators
Country forecast overview: Business environment rankings
Country forecast overview: United Arab Emirates's business environment at a
Fact sheet
Outlook for 2015-19: Political stability
Outlook for 2015-19: Election watch
Outlook for 2015-19: International relations
Outlook for 2015-19: Policy trends
Outlook for 2015-19: Fiscal policy
Outlook for 2015-19: Monetary policy
Outlook for 2015-19: Economic growth
Outlook for 2015-19: Inflation
Outlook for 2015-19: Exchange rates
Outlook for 2015-19: External sector
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data summary: External debt
Data sources and definitions

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