A new forecast from economics organisation IHS Global Insight suggests that the United Arab Emirates’ (UAE) economy will post strong growth over the next decade.
Booming national economy
Regional news hub Emirates 24/7 reports that IHS Global Insight recently released the findings of its new report. The firm predicted that the Emirates has a favourable long-term growth outlook, estimating that the national economy will expand by 3.5% on average per year for the next ten years.
Furthermore, IHS Global Insight ranked the Emirates as one of its 15 Europe, Middle East and North Africa (EMEA) investment hotspots that should prove advantageous to businesses in the coming decade. The think tank suggested that due to an increase in crude oil prices, Abu Dhabi’s oil exports should grow within this period. Coupled with robust expansion in Dubai, this should propel the UAE’s economy to new heights during the next ten years.
Emirati growth hotspots
Commenting on this forecast, Senior Director for Economics at IHS Global Insight Rajiv Biswas said: “The UAE is forecast to grow at 3.5% per year over the next decade, helped by a recovery in Abu Dhabi’s oil exports due to gradually improving oil prices over the medium term, as well as strong growth in Dubai’s economy.”
Biswas elaborated on the role Dubai is set to play in the growth of the UAE’s economy over the next ten years, suggesting that it will serve as a key driver of the wider Emirati economy. Expanding on this point, he said: “Dubai’s role as a leading global commercial aviation and shipping hub as well as tourism destination has helped to diversify the structure of the UAE economy.”
According to The National, a regional news outlet, last year Dubai became one of the top five fastest growing economies in the world. This came courtesy of a survey which assessed the economic performance of the planet’s largest 300 metropolitan economies by the Brookings Institute, a US think tank. Dubai, which climbed up this annual ranking from the Brookings Institute year-on-year to reach fifth place in 2015, posted strong employment rates and gross domestic product (GDP) per capita.
Explaining economic prediction
IHS Global Insight’s estimation somewhat hinges on oil prices. As the BBC points out, global oil prices have fallen from highs of over $100 per barrel in summer 2014 to under $40 per barrel at present. Oil accounts for a third of the UAE’s GDP, so declining oil prices have hit the Middle Eastern country’s economy. If oil prices improve, as IHS Global Insight believes they will, the UAE’s economy will benefit.
However, oil used to account for a higher percentage of the UAE’s GDP. In recent years, the country has moved to develop its non-oil economy, with this sector now accounting for two thirds of Emirati GDP. Not only did the UAE’s non-oil trade expand significantly in 2015, its growth rates climbed to a four month high in March 2016, indicating that it has enormous potential going forward. In other words, the Emirates is currently developing a robust economy which is slated to post impressive performance figures over the next decade even if global oil prices fail to pick up.
About Abdulrahman Al Ansari
Dr Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Dr Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.