News Column


August 31, 2014


The International Monetary Fund (IMF), Institute of International Finance (IIF), global credit rating agencies and a number of independent research organisations have revised upwards their growth forecasts for 2013, reflecting the improved fundamental strength of the economy. The IMF estimates that the economy grew by 4.5 per cent last year, supported by tourism, hospitality and real estate and expects it grow this year at the same pace. The UAE has substantial foreign assets, estimated at two to three times its GDP. The Abu Dhabi Investment Authority, one of the world's largest sovereign wealth funds, claims the emirate can sustain a surplus as long as oil prices remain above $48 per barrel. The financial crisis pricked Dubai's property bubble and exposure of banks continues to be of concern. Dubai's successful bid for Expo 2020 is expected to further stimulate the economy, with an estimated $8 billion to be spent on infrastructure projects ahead of the exhibition. On the upside, painful inflation levels have subsided, reducing pressure on households.


The UAE is perceived as one of the Middle East's most politically stable countries and so far has not seen any significant civil unrest. However, a lack of transparency and high-handed government interference in business contribute to its risk levels. The UAE has introduced compulsory military service for all males between the ages 18 to 30, in response to concerns over the growing turmoil in the region. It emerged last month that the UAE had been discreetly launching air strikes against militants in Libya signalling a bolder foreign policy. Dubai's highly westernised face could make it a high-profile target for terror groups but it has yet to witness a major attack. It backed Saudi Arabia in blacklisting the Muslim Brotherhood as a terrorist organisation and withdrew its ambassador from Qatar this year, to protest Doha's continued support for the organisation.


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Source: Gulf, The (Bahrain)

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