Country Forecast United Arab Emirates October 2015 Updater

Country Forecast United Arab Emirates October 2015 Updater



  • There will be little threat to domestic political stability in the UAE in the forecast period. Power in the emirates will remain concentrated within the ruling families; relations within these families can sometimes be fractious, but policy is unlikely to be disrupted. The wealth gap between Abu Dhabi, Dubai and the northern emirates is a fault line but is unlikely to cause substantial problems.
  • Popular demand for democracy is minimal, in large part because the country's energy wealth is distributed through public-sector employment and other benefits. The authorities will clamp down on perceived challenges to the political status quo, as is evident from the rise in arrests and convictions of activists. The Economist Intelligence Unit does not expect significant steps towards a more participatory political system to be taken in 2015-19.
  • The July 2015 comprehensive agreement on Iran's nuclear programme should revive trade and investment with the UAE, benefiting Dubai in particular. However, the UAE is concerned that it may strengthen Iran's strategic position in the region. Meanwhile, the UAE is undertaking a more assertive foreign policy, including costly ground combat in Yemen and participating in air strikes against Islamic State in Syria, bringing with it the risk of terrorist attack reprisals.
  • We forecast that the price of Brent crude will average US$53/barrel in 2015 and US$60/b in 2016. The fall in prices since mid-2014 is likely to prompt greater government spending restraint, but we do not expect it to derail the UAE's strong pipeline of projects. Lower oil prices will also lead to some fiscal reform, including further gradual reductions in subsidies. We forecast that the fiscal account will swing into deficit in 2015, recording a shortfall of 4.2% of GDP, before edging back into surplus in 2018-19.
  • 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.
  • We forecast that real GDP growth will slow to 3.2% in 2015 and average 3.5% in 2016-19. Growth will be driven largely by increased non-oil activity, supported by substantial investments in infrastructure and high incomes. Oil output will be constrained by falling oil prices. Inflation is forecast to remain manageable, averaging 3.2%.
  • The current account is forecast to shift from a hefty surplus in 2014 to much smaller surpluses in 2015-19, averaging 2% of GDP, as a result of lower oil prices, robust import growth and a widening non-merchandise deficit.






Country Forecast United Arab Emirates October 2015 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