United Arab Emirates Economic Outlook
The UAE has been ramping up plans in recent weeks to diversify its economy away from oil and to stimulate investment, which is already starting to reflect positively in economic data for Q2. Following a visa reform approved in May—which should support a flagging housing market— the government announced on 7 June a comprehensive joint investment plan with Saudi Arabia focused on the agricultural and hydrocarbon sectors as well as industrial SMEs, with further calls for cooperation in education and military ventures. Meanwhile, on 5 June, Abu Dhabi unveiled a three-year, USD 13.6 billion stimulus package aimed at fostering growth in new industries, boost tourism, and facilitate business, while aiming to create 10,000 jobs. This bodes well for business confidence, which shot up to the highest level ever recorded in the May PMI.
United Arab Emirates Economic Growth
The non-oil economy should be largely fueled by strong investment momentum this year. Aside from a large infrastructure push—particularly as Dubai prepares for Expo 2020—the country will benefit from the flurry of measures announced recently, further reinforced by a new investment law authorizing complete foreign ownership of firms in select sectors to be unveiled in Q4, which will likely attract large FDI inflows. Solid tourism growth should also support private consumption while the effects of VAT introduction in January subside. FocusEconomics panelists expect GDP to increase 2.6% in 2018, which is down 0.1 percentage points from last month’s forecast, and 3.2% in 2019.