The UAE is expected to lead economic growth in the Arabian Gulf this year amid higher spending that will be spurred on by recovering oil prices, according to the latest research from the National Bank of Abu Dhabi (NBAD).
While the region is heavily dependent on oil, the UAE has been among the countries in the region that have done a better job of diversifying its economy and coming up with new streams of revenue, according to the bank’s annual global investment outlook.
“The UAE Government was the first in the GCC to implement fiscal measures such as subsidy reduction, municipality fee increases and alternative sources to fund government spending,” NBAD said.
Since the price of oil began its descent in 2014, governments in the region have reduced energy subsidies, cut spending and raised debt in international markets to prevent deficits from spiralling out of control.
NBAD’s promising views on the UAE echoes what others have been saying, as well as hard data. The IMF said in October that the UAE is projected to grow at 2.3 per cent in 2016 and 2.5 per cent in 2017, while Saudi Arabia, the region’s biggest economy and the one most reliant on oil, is expected to experience economic growth of 0.4 per cent in 2017 from 1.2 per cent in 2016.
The UAE had strong non-oil private-sector growth last month, according to survey data from Emirates NBD.
Emirates NBD’s purchasing managers’ index (PMI) for the UAE rose to 55 in December from 54.2 in November, the bank said earlier this month.
A reading above 50 indicates that the non-oil economy is growing, while a reading below 50 suggests that it is contracting. Khatija Haque, Emirates NBD’s head of Mena research, said that the rising PMI score indicated “a solid expansion in the non-oil private sector” during the past quarter.
UAE-based business leaders reported rising output in December as orders increased, amid a return to growth of new export business.
As a result of the signs of economic improvement, NBAD is bullish about the prospects of UAE equities, especially given that listed companies trade at discount to emerging market stocks valuation-wise. The MSCI UAE index, a measure of stocks traded in both Abu Dhabi and Dubai, trades at 12.3 times earnings versus 15.8 for the broader MSCI Emerging Market Index.
The relatively attractive valuation comes even after the MSCI UAE index rose by 9 per cent last year by and 4.3 per cent in the year-to-date. In the same time frame, the MSCI Emerging Market Index rose by 3.6 per cent and 8.5 per cent.
mkassem@thenational.ae
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Lewis Hamilton in 2018
Australia 2nd; Bahrain 3rd; China 4th; Azerbaijan 1st; Spain 1st; Monaco 3rd; Canada 5th; France 1st; Austria DNF; Britain 2nd; Germany 1st; Hungary 1st; Belgium 2nd; Italy 1st; Singapore 1st; Russia 1st; Japan 1st; United States 3rd; Mexico 4th
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
ETFs explained
Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.
ETFs have zero upfront fees and annual charges as low as 0.07 per cent a year, which means you get to keep more of your returns, as actively managed funds can charge as much as 1.5 per cent a year.
There are thousands to choose from, with the five biggest providers BlackRock’s iShares range, Vanguard, State Street Global Advisors SPDR ETFs, Deutsche Bank AWM X-trackers and Invesco PowerShares.
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The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
FIXTURES
Saturday
5.30pm: Shabab Al Ahli v Al Wahda
5.30pm: Khorfakkan v Baniyas
8.15pm: Hatta v Ajman
8.15pm: Sharjah v Al Ain
Sunday
5.30pm: Kalba v Al Jazira
5.30pm: Fujairah v Al Dhafra
8.15pm: Al Nasr v Al Wasl
Profile
Company name: Jaib
Started: January 2018
Co-founders: Fouad Jeryes and Sinan Taifour
Based: Jordan
Sector: FinTech
Total transactions: over $800,000 since January, 2018
Investors in Jaib's mother company Alpha Apps: Aramex and 500 Startups
