The UAE's GDP should grow faster next year thanks to higher oil prices and increased trade, says the Minister of Economy.
Sultan al Mansouri said yesterday that the economy would expand between 3 per cent and 3.5 per cent next year, an improvement from this year's anticipated rate of between 2 per cent and 3.2 per cent.
He said he was optimistic for the Emirates's economy next year but the performance would hinge on the oil price and issues in other global economies such as Europe and North America.
Early indications from the first six months of the year are positive, he said in Dubai, and pointed to the 12.5 per cent growth in the aviation sector over the first half of the year.
"The trade figures also increased," he said ahead of this week's World Economic Forum summit in the emirate. "We expect the GDP of the UAE to reach Dh1 trillion [US$272.27 billion] by the end of this year."
Last year was a difficult period for the Emirates and globally but this year the country made progress on many of the issues facing its domestic companies, including Amlak, Tamweel and Dubai World, Mr al Mansouri said.
"All the issues that we had to tackle, and they were challenging issues for us in 2009, have been solved or are almost at the end of the solution," he said.
Sami al Qamzi, the director general of the Dubai Economic Department, said Dubai was now on track.
"Today, it is fair to say that Dubai is on course for healthy growth," he said. "We have demonstrated to the national and international business community that we are committed to fostering a sustainable, growth-oriented environment by improving efficiency, transparency, credibility and accountability in governance and services."
One outstanding issue, however, is the ongoing row between the UAE and Canada over landing rights for Etihad Airways and Emirates Airline.
"There has been some statements made from the Canadian side, which were sometimes very fiery statements," Mr al Mansour said. "This is not the way relationships between two countries are handled."
Canada is a major trading partner for the UAE, with $1.5bn worth of annual trade between the two countries, 90 per cent of which are exports from Canada, said Mr al Mansouri.
The UAE had been pressing for daily flights for both Etihad and Emirates, each of which currently has three flights a week. Last month, after six years of negotiations, Canada said it would not grant those landing rights to the UAE, in part citing the potential loss of tens of thousands of domestic jobs.
Mr al Mansouri challenged that statement, saying the extra flights would actually create more jobs for the Canadian people.
"It has been estimated that each additional flight would produce up to $60 million annually in the Canadian economy," he said. "It would provide job opportunities for the Canadians."
Mr al Mansouri also addressed issues concerning another major trading partner, Iran.
Last week, the UAE Government told the UN it was implementing sanctions against Iran, including barring some Iranian ships from its ports and refusing some of its citizens entry to the country.
Mr al Mansouri said yesterday it would continue to trade with the Islamic republic but only to the extent permitted under the UN sanctions.
"Iran is a very, very important trading partner for us, historically and as a neighbour. We would always continue to trade with Iran, within the framework of the United Nations."
aligaya@thenational.ae
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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.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
RESULT
Liverpool 4 Southampton 0
Jota (2', 32')
Thiago (37')
Van Dijk (52')
Man of the match: Diogo Jota (Liverpool)
