The economic recovery condition across North Africa and the Middle East is anticipated to decelerate in 2019 and expansion is likely to be weaker than the majority expects, however the UAE at 3.5 per growth is projected to be the best performer in the area in the run-up to Expo 2020 Dubai, according to analysts at Capital Economics.
Fortunately, in the Gulf, low oil prices do not cause any major strains to the balance sheet, nevertheless, oil output cuts and tighter fiscal policy will be the main reasons for feeble economic growth to deteriorate, analysts observed in Capital Economics’ Mena Economic Outlook.
although the UAE’s economy is prone to be the best performer in the Gulf, assisted by arrangements for Expo 2020 Dubai, it is predicted that Saudi Arabia’s economy is leaning towards a slowdown this year on the back of oil output cuts and tighter fiscal policy, as mentioned in a report.
According to a report, Kuwait’s economy is the best location in the Gulf to deal with low oil prices, however, even then its anticipated growth will stay weak. Balance sheets in Bahrain and Oman are moderately fragile. Monetary support from neighbors can facilitate to keep dollar pegs intact. In return, though, severity is possibly going to step up, reflecting on fiscal growth.
Analysts anticipate UAE GDP escalation to be a bit stronger this year compared to 2018. “Our estimate of 3.5 percent lies beyond the consensus.”
UAE agreed with the rest of OPEC to reduce the production of oil. However the annual fluctuation in oil output – which is eventually what impacts GDP growth – is really likely to be a touch stronger this year than in 2018.
“We suspect that the oil production cuts will present a boost to oil prices – in reality, we believe that Brent crude will fall to $50 for each barrel by the end of 2019. This will not cause too much of an issue for the UAE. The present account will remain in excess and the budget deficit is tiny and can be effortlessly financed from the country’s large savings,” analysts assumed in the report.
On the contrary to the rest of the Gulf, economic policy must remain somewhat supportive. Infrastructure expenditure will be accumulated as preparations for Expo 2020 Dubai speed up. There will be a considerable enhancement to the economy when the Expo rolls into town in 2020. But, mounting supply is probably going to extend the downturn in the property segment.
The increase in property prices back in 2012-14 was not determined by an accumulation in credit so a recurrence of the challenges in 2019 is dubious. Additionally, a slowdown in the worldwide economy is likely to reflect on activity in the UAE’s imminent manufacturing, tourism and logistics sectors.