2012-11-15 20:14:52 - United Arab Emirates Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com
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.
Abu Dhabi will outperform Dubai over the coming years given its large-scale investment plans targeting the infrastructure sector and ongoing concerns surrounding Dubai´s lingering debt repayment schedule. A further tightening in international sanctions on Iran bodes poorly for Dubai´s outlook given its trade linkages with the Islamic Republic.
Despite a recent uptick in tensions between the government and domestic Islamist opposition groups, our core forecasts envision broad political stability over the coming years.
Major Forecast Changes
We have revised our core real GDP growth forecasts, and are now projecting the economy to expand 3.6% and 4.4% in
2013 and 2014 respectively.
Alongside a tentative stabilisation in Dubai´s housing sector, we have revised up our inflation forecasts, and are now projecting headline CPI to come in at 2.9% by the end of 2013.
Key Risks To Outlook
Any outbreaks of public unrest would have significant repercussions for the country´s reputation as an inherently stable environment for foreign investment.
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.
With global growth slowing, downside risks to oil prices in 2013 are elevated, which could undermine the UAE´s already fragile macroeconomic recovery.
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