UAE to gain momentum in H2

UAE's recovery is more or less in line with an upturn in global economy that is expected to record a 2.7 per cent growth after a tumultuous 2016. - AFP

The UAE economy is set to pick up momentum by the second half of 2017, largely driven by a much-anticipated recovery in commodity prices and Expo 2020 infrastructure investments. Expo 2020 Dubai, organisers of the global trade expo, will award 47 construction contracts worth Dh11 billion this year, on top of 98 non-construction contracts worth Dh360 million in 2017.

After a decelerated growth in 2016, the UAE growth will pick up in 2017 to reach 2.5 per cent up from 2.3 per cent in 2016 because of its diversified economy, said Massimo Falcioni, CEO of Middle East Countries at Coface, a worldwide leader in credit insurance. UAE's recovery is more or less in line with an upturn in global economy that is expected to record a 2.7 per cent growth after a tumultuous 2016, Falcioni told Khaleej Times. After GCC countries except Kuwait had seen economic contraction, growth is expected to improve in 2017 across the region, except in Oman and Bahrain, Coface said in its global and regional economic outlook report.
"The UAE has remained relatively resilient in the face of lower hydrocarbon prices because of its economic diversity, but the lower oil revenues left government spending constrained and this had a spillover effect on all economic activities. The slight rise in oil prices now should give a corresponding impetus to the UAE economy," said Falcioni. However, Abu Dhabi, being the most oil-dependent emirate, will continue to see a slowdown in 2017. Dubai should be more resilient but some non-oil economic activities could still falter. Overall, the country's growth will be driven by the tourism and financial sectors, while difficulties in the construction sector will remain, he said.
"The stable political and security climate of the UAE helps it stands out in the region. The country's business climate, already the most favourable in this region, is improving further," said Falcioni. The much anticipated passing of the new UAE insolvency law will make the country still more business-friendly, giving companies in difficulty a reliable mechanism to restructure their operations, he said.
According to a World Bank report, the UAE was rated the top country in the Middle East and North Africa in doing business. The UAE led the GCC in terms of the number of reforms implemented and it jumped 39 ranks in the reform category of 'Protecting Minority Investors.' Falcioni said since oil prices are not expected to return to the previous high levels immediately public spending in the GCC will remain cautious. "A wide range of factors that would impact regional and global consumption patterns calls for greater measures to protect business assets," he said.
The UAE Vision 2021 National Agenda aims for the UAE to be at its heart of the global economy in the coming years. The agenda focuses on the UAE becoming the economic, touristic and commercial capital for more than two billion people by transitioning to a knowledge-based economy, promoting innovation and research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors. 
According to the Ministry of Economy, the UAE's GDP tripled in the past 10 years, climbing from almost Dh511 billion in 2006 to an estimated Dh1.8 trillion in 2016. Economists expect higher oil revenues with the expected average oil price increase to $55 per barrel would boost the growth prospects.
According to Coface, Saudi Arabia's economic growth is expected to accelerate to 1.8 per cent in 2017 from 1.3 per cent in 2016. For Qatar, growth is forecast to be 3.3 per cent in 2017, up from 2.6 per cent in 2016. Bahrain will shrink further going down to 1.7 per cent in 2017 from two per cent in 2016. Growth in Oman will also dip slightly again to be 1.7 per cent in 2017 while Kuwait will grow 2.6 per cent. - issacjohn@khaleejtimes.com