UAE economy: improvement in 2H09 not guaranteed

by Daniel Kaye, Senior Economist, +965 2259 5363
[email protected]

• Analysts’ forecasts for real growth in the UAE economy in 2009 have converged around the 0-2% range recently, factoring-in a recovery in economic performance in H2 09. But a meaningful improvement is by no means guaranteed.
• Even if financial markets stabilize, a combination of subdued asset prices, a large debt overhang and rising risk aversion is likely to bear down on private sector activity for some time to come. Government spending is likely to be the only major source of support.
• Accordingly, the risks surrounding the consensus view of economic growth this year remain stacked to the downside. We expect to downgrade our forecast for GDP over coming weeks.


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