A Bank of America Merrill Lynch analyst has said that the UAE’s economy will experience a “soft landing” in 2015.
State of UAE’s economy
The UAE is a prosperous country with a robust economy. Gulf News reported that the Emirates’ GDP expanded from Dh314.8 billion in 2004 to Dh1.54 trillion in 2014. However the UAE is an oil-based economy, and this means that it has been impacted by the current global oil price crisis. As previously reported on the James Swallow blog, the Middle Eastern country is developing its non-oil based sector to protect its economy from falling oil prices.
UAE set for “soft landing.”
According to The National, an analyst at the Bank of America Merrill Lynch has suggested that falling oil prices, among other factors, will cause the UAE’s economy to experience a “soft landing” in 2015. This is term the global finance industry uses to describe a slowing of national economic growth, that doesn’t exacerbate unemployment or inflation.
The analyst wrote in a research note that economic activity in the UAE “is likely to face headwinds … due to a confluence of low oil prices, a less favourable external backdrop, and gradually tightening domestic liquidity.” This is underscored by the International Monetary Fund’s (IMF) recent decision to revise UAE economic growth expectations down from 4% to 3% for 2015.
“Very good pace of growth.”
A range of the world’s top economists agreed that the UAE’s GDP will expand at a lower level in 2015 than it did in 2014. Philippe Dauba-Pantanacce, a senior economist for the Middle East at Standard Chartered, commented that “The UAE economy is slowing down for sure.”
Dauba-Pantanacce went on to suggest: “This is still a very good pace of growth. It is always better to grow steadily and at a more reasonable pace than to go through cycles of boom and bust. The UAE is by far the most diversified economy in the region. And Dubai is the best form of diversification away from oil that the UAE could ever have dreamed of.”
Rise of UAE’s non-oil sector
This means that economists are saying that yes, the UAE’s economy will have a soft landing in 2015, but this’ll be somewhat offset by the development of the Middle Eastern country’s non-oil sector. The rise of the Emirates’ industrial, retail and tourist sectors will provide its economy with the capital it needs to keep expanding in 2015 and beyond.
James Swallow is Commercial Director of Middle East based PRO Partner Group. Pro Partner Group specialises in providing foreign investors with a seamless and financially efficient means to setting up a profitable corporate presence in the UAE, Qatar and Oman.