The UAE economy is forecast to grow at an average 3.8 per cent annually in the next five years, supported by an increase in investment flows and a rise in private consumption, according to a study.
The average real gross domestic product – an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year – of the UAE between 2019 and 2023, will also be boosted by the expansionary fiscal policies of the Government, Dubai Chamber of Commerce said in its UAE Macroeconomic Model report, released yesterday.
A growing number of infrastructure and construction investments in the run up to Expo 2020 will also bode well for the overall GDP growth of the second-biggest Arabian Gulf economy, it added.
“A recovery in private consumption and sales of highly cyclical consumer products is expected, extending to products such as vehicles, furniture, household appliances and medical equipment,” the chamber said. “Meanwhile, robust growth in investment is projected on the back of government fiscal stimulus.”
The non-oil economy of the UAE is projected to grow by an average of 4.1 per cent annually between 2019-23, compared to the 2.8 per cent recorded in the 2014-18 period.
The non-oil sector's growth will be driven by other sectors including transport and communications, which are set to grow by 7.9 per cent over the five-year period, followed by construction, expected to expand by 4.2 per cent, and real estate and business services that are expected to record a growth of 3.8 per cent until 2023, said the chamber.
Recent reforms to reduce the cost of doing business in the Emirates are also expected to support growth within the country's small and medium-sized enterprises and private sector businesses.
The UAE's overall economy, which grew only by 0.8 per cent in 2017, mainly on the back of Opec-led oil output cuts and crude price declines, is set to accelerate this year amid a slew of Government measures aimed at propelling the non-oil sector, which accounts for more than 70 per cent of the country's GDP. The Central Bank of the UAE forecasts the economy to grow 4.2 per cent in 2019 as government reforms and stimulus measures start yielding results.
In June, Dubai and Abu Dhabi announced they were exempting companies from administrative fines for at least the rest of last year, as part of efforts to stimulate business growth. Dubai unveiled in April plans to implement measures to help boost economic growth, attract investment and cut the cost of doing business across sectors ranging from tourism to financial services.
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Read more:
UAE economy will see robust growth in year ahead
UAE Central Bank says economy to expand 4.2% in 2019
Dubai approves stimulus plan, slashing aviation fees
Abu Dhabi's Dh50bn stimulus will boost economic growth, property market
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Abu Dhabi, also in 2018, announced a $50-billion three-year stimulus package to support non-oil private sector growth.
The UAE Government in 2018 approved a foreign direct investment law that is expected to boost FDI flows by up to 20 per cent this year, from an average growth rate of 8 per cent, Economy Minister Sultan Al Mansouri said in November. Foreign investment is forecast to rise to $11.5bn (Dh42.4bn) in 2018 from $10.8bn in 2017. The Government is also planning to grant long-term visas of up to 10 years and gave the nod for new low-cost employee insurance policies to help retain talent and attract investors.
In terms of best investment opportunities for Dubai businesses, the emirate’s trade body noted that the Middle East and North Africa accounts for the largest share of Dubai’s exports with 41 per cent. Emerging Asia with 26 per cent follows Mena, Sub-Sahara Africa accounts for 18 per cent, while the CIS, which includes Russia, Azerbaijan and other post-Soviet states, accounts for 1 per cent. The CIS region, along with Latin America at 0.8 per cent, are the two smaller destinations of exports, the chamber said, citing trade data for the first nine months of 2018.
The chamber said that chemicals and allied products was the top-performing product category for Dubai’s exports to Asia. Within Sub-Sahara Africa and Latin America, wood pulp and paperboard was the top category for exporters, while vegetable oils dominated the emirate’s exports to the CIS region.
However, the global economic picture remains uncertain over the medium term, Dubai chamber noted. Total global growth over 2019-23 period looks set to be modest, with real GDP expansion projected to reach an average of 3.6 per cent annually, according to recent projections from the IMF.
On the other hand, emerging markets are expected to see average growth of 4.8 per cent for the period, outperforming advanced economies and the global average.
THE BIO:
Sabri Razouk, 74
Athlete and fitness trainer
Married, father of six
Favourite exercise: Bench press
Must-eat weekly meal: Steak with beans, carrots, broccoli, crust and corn
Power drink: A glass of yoghurt
Role model: Any good man
In numbers
1,000 tonnes of waste collected daily:
- 800 tonnes converted into alternative fuel
- 150 tonnes to landfill
- 50 tonnes sold as scrap metal
800 tonnes of RDF replaces 500 tonnes of coal
Two conveyor lines treat more than 350,000 tonnes of waste per year
25 staff on site
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
BAD%20BOYS%3A%20RIDE%20OR%20DIE
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Adil%20El%20Arbi%20and%20Bilall%20Fallah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EWill%20Smith%2C%20Martin%20Lawrence%2C%20Joe%20Pantoliano%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5%2F5%3C%2Fp%3E%0A
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
