2013-02-22 13:41:04 - Fast Market Research recommends "United Arab Emirates Business Forecast Report Q2 2013" from Business Monitor International, now available

Core Views

Deleveraging will remain a prominent theme well into 2013, as corporates continue to focus on repairing their balance sheets. This will limit activity in the non-hydrocarbon economy.

The outlook for Dubai has become slightly more promising relative to that for Abu Dhabi, with the former benefitting from increased activity in the trade and tourism sectors, in addition to the beginnings of a recovery in the all-important real estate industry.

Major Forecast Changes

We have revised our core real GDP growth forecasts, and are now projecting the economy to expand 3.7% and 3.8% in 2013 and 2014 respectively.

Key Risks To Outlook

Any attack by Islamist militants would result in a fundamental reappraisal of both the UAE's and the wider region's risk profile.

A further

uptick in tensions between the West and Iran could result in a deterioration in the UAE's sovereign risk profile, given the close proximity and deep trade ties between the two countries.


Full Report Details at
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With global growth slowing, downside risks to oil prices in 2013 are elevated, which could undermine the UAE's already fragile macroeconomic recovery.

Partial Table of Contents:

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Threat Of Islamist Militancy Rising
- The threat of Islamist militancy in the UAE is likely to increase over the coming years. Growing income inequalities and stark divisions in the social backdrop between Dubai on one hand, and the northern emirates on the other, will be a particularly pertinent flashpoint for instability. Although by no means our core scenario, any successful attack by Islamist militants in the UAE would have significant consequences for the entire region, particularly given the country's 'safe haven' status.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Three Challenges For The Coming Decade
- The UAE is not without its challenges. However, it is one of the more stable Gulf states over the long term, with a small, wealthy population, no history of terrorism and no sectarian tensions to speak of.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
2013 Macro Outlook Remains Promising - We are projecting the UAE economy to expand by 3.7% in real terms in 2013, down only slightly from an estimated 3.9% rate of expansion in 2012.
External Debt
2014 Funding Cliff Looms Large - The technical default by Sharjah-based Dana Gas on its US$920mn sukuk on October 31 is a highly symbolic development, and serves to underscore that the UAE's debt overhang lingers..
TABLE: ABU DHABI MATURING BONDS AND SYNDICATED LOANS
TABLE: DUBAI MATURING BONDS AND SYNDICATED LOANS
Economic Activity II
BMI On The Ground: From Strength To Strength?
- A recent visit to the UAE and Oman confirmed several of our core views on how regional and global developments were impacting business conditions across the Gulf. Activity in Dubai appears to be gradually accelerating, with the emirate having made significant strides in recent months at solidifying its reputation as the GCC's main financial hub.
Banking Sector
New Regulations Stifling Recovery?
- Policy risks throughout the UAE's commercial banking sector will remain elevated in 2013. The recent introduction of a more stringent cap on mortgage loan-to-value ratios could stifle a broader recovery in both the banking and real estate sectors over the coming months. Our core view of a steady, albeit slow, expansion in credit growth remains in place.
TABLE: GDP BY EXPENDITURE
Fiscal Policy
Public Sector Payroll To Expand
- An uptick in activity across Dubai's non-oil economy will likely result in an acceleration in tax revenues in 2013, helping to narrow the emirate's budget deficit to less than 1.0% of GDP.
TABLE: FISCAL EXPENDITURE BREAKDOWN
Monetary Policy
Inflation To Trend Higher
- Consumer price inflation in the UAE is set to trend higher in 2013, underpinning our view for the headline print to come in at 2.9% at end-year, up from an estimated 0.7% in 2012.
TABLE: MONETARY POLICY
Regional Story
Key Themes Of 2013
- The Middle East and North Africa's macroeconomic, political and social backdrop is likely to remain in flux in 2013. The major themes we expect to define the region over the coming year include real GDP growth slowing in the GCC while picking up in North Africa, policy risks taking a greater share of investors' attention, a continuation of the crises in Iran and Syria, growing balance of payments strains, and a tentative recovery in regional equity markets.
Chapter 3: 10-Year Forecast
The UAE Economy To 2022
Greater Caution, Slower Growth
- After its recent experience of boom and bust, we are forecasting a slower but more sustainable growth trajectory for the UAE over the next five to 10 years. Consumer spending will remain the key driver of GDP.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
Infrastructure
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
Market Orientation

Full Table of Contents is available at:
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