Abu Dhabi - Mubasher: Real GDP in the UAE is set to gather pace in 2017 and into 2018, following two straight years of softer growth, according to a report published by the National Bank of Kuwait (NBK) on Tuesday.
This comes as the non-oil sector is likely to stage a healthy recovery and offset some of the moderation in the oil sector, the report added, noting that activity is likely to more than make up for that, as we see the hospitality and construction sectors propelled forward especially in the run-up to the Expo 2020 event in Dubai.
“Activity in the residential real estate sector is also seeing signs of stabilization, after almost two years of slowing growth. We anticipate a jump in real non-oil growth from around 2.6% in 2016 to 3.6% and 4.5% in 2017 and 2018, respectively.”
Real growth in the oil sector slowing from an estimated 2.4% in 2016 to 1.6% in 2017 before rising to around 2.8% in 2018 as production is gradually restored to its pre-production cut levels, the report added.
Inflation is projected to see some more upward pressures, on the back of tax hikes or further subsidy cuts, while the fiscal balance is forecast to remain in deficit in 2017, before edging back into a surplus in 2018 on higher public revenues.
Bank liquidity is set to improve in 2017 and 2018 as deposit growth picks up on stronger oil revenues, the report indicated.
Both the of the countries’ stock markets, Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) rallied toward the end of 2016 on a recovery in oil prices and the agreed merger between the National Bank of Abu Dhabi and First Gulf Bank, which could make it the second largest bank in the Middle East.
Increased enthusiasm following the US presidential elections also helped lift UAE markets, as it has global and regional markets, on the expectations that the new administration will usher in a wave of expansionary fiscal policy and boost US and global growth, according to NBK.
