Lower oil prices will hit growth as government spending and consumer confidence falls. We forecast real GDP growth at 2.8% and 2.6% in 2016 and 2017 from an estimated 4.0% in 2015
Dubai will see an even sharper slowdown as discretionary spending from the rest of the Gulf, and the impact of weaker currencies in China and India take their toll on investment ad spending.
Credit growth to the private sector will remain relatively slow through 2016 as commercial banks continue to increase provisioning against potential loan losses due to the debt funding cliff.
Any attack by Islamist militants would result in a fundamental reappraisal of both the UAE's, and the wider region, risk profile.
Any breakdown in the nuclear agreement the West and Iran could result in a deterioration in the UAE's sovereign risk profile given the close proximity and deep trade ties between the two countries.
|Real GDP growth, % y-o-y||4.6||4.0||2.4||2.6|
|Nominal GDP, USDbn||399.4||369.3||389.0||410.8|
|Consumer price inflation, % y-o-y, eop||3.7||3.6||3.0||3.2|
|Exchange rate AED/USD, eop||3.67||3.67||3.67||3.67|
|Budget balance, % of GDP||5.0||-5.9||-6.1||-4.7|
|Current account balance, % of GDP||14.5||3.6||1.2||2.0|
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