The UAE is currently showing stronger signs of recovery following the global financial crisis in 2009. Economic growth in the UAE is driven by an increase in oil production and high spending on infrastructure in Abu Dhabi, while in Dubai growth is driven by a pickup in trade, transportation, logistics industries and tourism.

The overall fiscal and external balances are expected to improve going forward, due to a higher oil export prices and a modest expansion in oil output. In Abu Dhabi, non-hydrocarbon growth is supported by high spending on infrastructure, mainly through government related entities (GREs).

Meanwhile, Dubai is benefitting from its leading position as a regional hub for trade and financial services, offsetting further contraction in the real estate sector. Dubai is increasingly being regarded as a safe-haven amid recent political turmoil in the MENA region and confidence levels have improved after Dubai World successfully structured its debt. However, worries over other GREs and the size of debt overhang in Dubai will likely keep borrowing costs high compared to other GCC countries. 

 ADSM Index