UAE economy will pull through downturn

Subject

UAE economic outlook.

Significance

This year the United Arab Emirates (UAE) may see its first current account deficit on record and its largest fiscal deficit in decades. Given that the oil price crash is deeper and more prolonged than the one in 2008-09, which was followed by a serious financial crisis in Dubai, there are concerns that the current downturn could lead to a repeat of this.

Impacts

• Foreign companies can continue to invest with confidence in the UAE.
• Although some costs, including taxes, will increase, the UAE will remain highly competitive by international standards.
• If oil prices are higher than expected, this will largely be funneled into renewed outbound investment.
• The UAE is politically stable and there is little sign of any threats on the horizon.