Dubai Growth To Outpace Abu Dhabi
BMI View: Dubai will become an increasingly important growth driver in the UAE as the emirate's non-oil economy records significant growth rates. We expect the tourism, real estate and retail sectors to bolster growth as Dubai continues to bounce back strongly from the recession. Whilst the 2014 debt funding cliff will cause a temporary slowdown in the emirate's economy, the long-term picture is positive. We forecast real GDP growth of 3.8% in 2014 and 4.2% in 2015, following 4.4% in 2012.
Dubai will increasingly become the key driver of the UAE's economic growth in the coming quarters as the emirate's non-oil sector expands substantially . Indeed, while Abu Dhabi will see GDP growth constrained by moderate increases in oil output and lower oil prices, Dubai will drive the UAE's non-oil economy which will become increasingly important to the country . We forecast Dubai's real GDP growth to reach 3.8% in 2014 and 4.2% in 2015, following 4.4% in 2012. This growth will be driven by the tourism, real estate and retail markets.
Consumer and business sentiment towards Dubai has improved significantly since the start of the year, with real estate and equity markets showing the most notable signs of improvement. Dubai's DFMGI is one of the best performing equity markets in the Middle East since over the first three quarters of 2013, having posted gains of 68.2% and boding well for a positive wealth effect. Whilst there has been a pullback of late, as part of a wider move away from equities globally, we remain bullish towards the index given positive underlying fundamentals.
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