UAE economy to post strong growth of 3.1% in 2015

The importance of economic diversification, increased global trade, and foreign assets for the GCC countries was highlighted at the Coface Country Risk Conference yesterday.

According to Coface, a leader in trade credit management and risk information solutions, the UAE economy will post strong growth of 3.1 per cent in 2015, very close to the GCC GDP growth forecast of 3.2 per cent. Saudi Arabia is expected to grow by 2.5 per cent.

Gregory Le Henand, Country-Manager, GCC (Supplied)

“The UAE’s economy is one of the most diversified among the GCC countries. Hydrocarbon revenues account only for 25 per cent of GDP and 20 per cent of total export revenues, and more than 60 per cent of the country’s budget revenues still depend to edge up on the back of non-oil sector development,” said Julien Marcilly, Chief economist, Coface.

“Though the GCC economies are still dependent on the hydrocarbon sector as their main export and source of fiscal revenues, in the past decade respective governments have decided to replace their growth model by economic diversification that aims to reduce dependence on hydrocarbon, where prices are volatile and can be a source of macroeconomic imbalances,” he added.

Although the forecast 2015 rates can still be considered high compared with many emerging and advanced economies, they remain below the region’s average growth rate of 5.8 per cent between 2000 and 2011. The main reason for this slowdown is the decline in oil prices.

Julien Marcilly (Supplied)

Rising government spending, coupled with falling oil prices, may transform the region’s budget surplus of around 10 per cent in 2013 into a significant deficit in 2015. The same situation applies to current account balances. It is estimated that the current account surplus will dip from around 20 per cent of the region’s GDP in 2013, to close to 0 per cent in 2015.

“We are pleased to note that GCC countries have built solid trade ties with Western and Asian countries in particular,” said Massimo Falcioni, Head of Middle East Countries at Coface.

“More resilient economies benefit from strong macro-economic fundamentals such as more diversification, solid financial buffers and greater integration with the world trade. The pace of growth of private consumption expenditure and governments’ e­fforts to support sustainable economic growth are helping to keep the outlook positive,” Falcioni added.

“The Coface Country Risk Conference allows SMEs to understand the market of the countries to which they are currently exporting and which they are looking to enter. Through this knowledge they will be better prepared to capitalise on the opportunities,” said Mohammed Al Kamali, Deputy CEO, Dubai Exports.

Massimo Falconi (Supplied)

“The event with its high-profile speakers and attendees acted as a guide for regional countries to understand the importance of economic diversification and not be reliant on mere hydrocarbon income,” said Gregory Le Henand, Country Manager, GCC Countries, Coface.

The Coface Country Risk Conference was the opener of the 6th Global Trade Development Week (GTDW).

GTDW 2015 is expected to hit a record number of participating industry leaders and high-level policymakers who have come to the right venue to discuss the latest developments in international trade, according to Andrew Keable, Co-CEO of GTDW organizer KW Group.

“Coface, coming under the same roof as GTDW, is great boost to the event, particularly at a time when the need for trade credit management solutions has grown substantially across the GCC and is of increasing importance to the GTDW audience,” Keable said.

Julien Marcilly speaks at the Coface Country Risk Conference(Supplied)

The Coface Country Risk Conference featured a powerful line-up of key decision-makers and economists who discussed the global and regional economic outlook and the much-needed assessment of business risks in today’s economic climate.

Dr. Ashraf Mahate, Head of Market Intelligence at Dubai Exports, who spoke on the Africa segment of the conference, commented that the continent is an amazing opportunity for companies to expand their businesses in a market that is rapidly growing and becoming more urbanised. Africa is also expected to have more than half a billion middle class people by 2030.

The Coface Country Risk Conference was organised in partnership with Dubai Exports, National General Insurance, and Oman Insurance.

 

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