Business Monitor International


United Arab Emirates Business Forecast Report

Published 24 September 2014

  • 49 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
United Arab Emirates Business Forecast Report

Core Views

  • Our baseline scenario sees relatively solid growth over the coming quarters, with real GDP forecast to expand 3.9% and 4.0% in 2014 and 2015 respectively.

  • We expect Dubai to outperform Abu Dhabi, with the former benefitting from increased activity in the trade and tourism sectors, in addition to our expectation that the all-important real estate industry is now set for sustained growth.

  • Credit growth to the private sector will remain relatively slow through 2014 as commercial banks continue to increase provisioning against potential loan losses due to the debt funding cliff.

Major Forecast Changes

  • On the back of a stronger-than-expected recovery in Dubai's residential property sector, we have revised up our 2014 average inflation forecast, and now project the headline print coming in at 3.5% this year.

Key Risks To Outlook

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

  • Downside risks to oil prices in H214 and 2015 are elevated, which could undermine the UAE's macroeconomic recovery.

Macroeconomic Forecasts (United Arab Emirates 2012-2015)
Indicator 2012 2013 2014f 2015f
National Sources/BMI. e/f = BMI estimate/forecast
Nominal GDP, USDbn 372.3 402.3 429.7 464.2
Real GDP growth, % y-o-y 4.7 5.2 3.9 4.0
Consumer price inflation, % y-o-y, eop 0.6 1.5 3.5 4.0
Exchange rate AED/USD, eop 3.67 3.67 3.67 3.67
Budget balance, % of GDP 8.9 6.7 4.9 3.5
Current account balance, % of GDP 18.5 16.1 17.3 16.1

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Foreign Policy
8
Alleged UAE Involvement Heralds Regional Entanglement In Libya
8
table: Political Overview
8
Long-Term Political Outlook
9
Three Challenges For The Coming Decade
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
UAE Economic Activity
14
Sanguine Outlook Across Economy
14
table: UAE - GDP By Expenditure
14
Dubai Economic Activity
15
Returning To The Boom Years
15
Table: Dubai - Economic Activity
16
Abu Dhabi Economic Activity
17
Slowing Growth As Oil Sector Sees Marginal Gains
17
Table: Abu Dhabi - Economic Activity
17
UAE Monetary Policy
19
Inflation To Peak in 2015
19
table: UAE - Monetary Policy
20
Key Sector Outlook
21
Dubai Housing: Regulation To Ease 'Bubble' Fears
21
Islamic Banking
23
New Markets To Emerge, But Impediments To Restrain Growth
23
Regional Investment Climate
26
MENA FDI: Outperformers And Laggards
26
Chapter 3: 10-Year Forecast
31
The UAE Economy To 2023
31
Greater Caution, Slower Growth
31
table: Long-Term Macroeconomic Forecasts
31
Chapter 4: Business Environment
33
SWOT Analysis
33
BMI Business Environment Risk Ratings
33
Business Environment Outlook
34
Institutions
34
TABLE: BMI BUSINES AND OPERATION RISK RATINGS
34
Infrastructure
35
TABLE: BMI LEGAL FRAMEWORK RATING
35
TABLE: LABOUR FORCE QUALITY
36
Market Orientation
37
TABLE: MENA - ANUAL FDI INFLOWS
37
TABLE: TRADE AND INVESTMENT RATINGS
38
Operational Risk
39
TABLE: TOP EXPORT DESTINATIONS
39
Chapter 5: Key Sectors
41
Pharmaceuticals & Healthcare
41
table: Pharmaceutical Sales, Historical Data And Forecasts
42
table: Healthcare Expenditure Trends, Historical Data And Forecasts
43
table: Government Healthcare Expenditure Trends, Historical Data And Forecasts
43
table: Private Healthcare Expenditure Trends, Historical Data And Forecasts
43
Telecommunications
45
table: Telecoms Sector - Mobile - Historical Data & Forecasts
46
table: Telecoms Sector - Wireline - Historical Data & Forecasts
47
Other Key Sectors
49
table: Oil & Gas Sector Key Indicators
49
table: Defence & Security Sector Key Indicators
49
table: Infrastructure Sector Key Indicators
49
table: Food & Drink Sector Key Indicators
50
table: Autos Sector Key Indicators
50
table: Freight Key Indicators
50
Chapter 6: BMI Global Assumptions
51
Global Outlook
51
Eurozone Downgrade On Poor Q214
51
Table: Global Assumptions
51
Table: Developed States, Real GDP GrowtH, %
52
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
52
Table: Emerging Markets, Real GDP Growth, %
53

The United Arab Emirates Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in the United Arab Emirates and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of the United Arab Emirates' economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of the United Arab Emirates' economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise the United Arab Emirates' country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in the United Arab Emirates, including currency volatility, the commodity price boom and protectionist policies.

The United Arab Emirates Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Emirati economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for the United Arab Emirates through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The United Arab Emirates Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for the United Arab Emirates and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on the United Arab Emirates, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in the United Arab Emirates over the next 5-years?

BMI's United Arab Emirates country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Emirati Market - Political Strengths, Weaknesses, Opportunities and Threats facing the United Arab Emirates.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for the United Arab Emirates' risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark United Arab Emirates' risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for the United Arab Emirates, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of the United Arab Emirates' business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in the United Arab Emirates will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in the United Arab Emirates' high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express