Emirates NBD joins HSBC in predicting faster UAE growth

The DFM surged 79% and ADX gained 48% so far this year

A view of buildings in the Dubai Marina. The international Monetary Fund raised its growth forecast for the UAE’s economy this month to four per cent from 3.1 per cent. — AFP

Emirates NBD, Dubai’s biggest bank, raised its estimates for economic growth in the UAE this year to 4.4 per cent, aided by an increase in oil output.

The forecast was raised from 3.8 per cent, putting the second-biggest Arab economy on track for a higher growth rate than Saudi Arabia for the first time in at least four years, according to the bank’s recently released quarterly economic report.

Emirates NBD lowered its forecast for Saudi economic growth to 3.9 per cent from five per cent after lower-than-anticipated expansion in non-oil industries during the first half of the year. Even if UAE oil production stabilises at the current 2.9 million barrels a day, “the hydrocarbon sector is likely to contribute positively to overall gross domestic product growth this year,” economists Khatija Haque and Jean Paul Pigat, wrote in the report. Perhaps more important than the actual growth rate, “is the direction of change in the forecast,” they said.

Emirates NBD joins banks such as HSBC Holdings and National Bank of Abu Dhabi in identifying growing momentum in the UAE economy. The International Monetary Fund (IMF) also raised its growth forecast for the country’s economy this month, to four per cent from 3.1 per cent.

Dubai’s benchmark DFM General Index of stocks has surged 79 per cent this year, making it the best performer among 93 global indexes tracked by Bloomberg. Abu Dhabi’s gauge has gained 48 per cent. Sultan bin Saeed Al Mansouri, the UAE Minister of Economy, said last month that he expects gross domestic product to expand as much as 4.5 per cent this year.

In addition, Abu Dhabi’s state-owned fund International Petroleum Investment Co (Ipic) has repaid in full a $2 billion loan that its unit took out in 2011 to finance the purchase of a stake in Malaysian bank RHB Capital, banking sources aware of the matter said.

Ipic’s majority-owned unit Aabar Investments agreed in 2011 to pay 10.80 ringgit per share for ADCB’s 25 per cent stake in RHB in a $1.9 billion deal.

The valuation offered by Aabar effectively stalled a consolidation in Malaysia’s banking sector. ADCB booked a $357 million gain from the stake sale.