The United Arab Emirates is one of the more stable Gulf states and attracts a number of our clients. It has a small, wealthy population, no history of terrorism, and no sectarian tensions to speak of. The country is also supported by strong relations with the US. The UAE has a low level of democracy and transparency, but heavy oil-funded spending on security and social benefits help ensure there are few real challenges.

We ensure our clients make sound investment decisions in the UAE, using our risk-assessed total analysis model. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Our expert views are supported by our interactive data and forecasting. We also provide in-depth analysis on 21 of the UAE’s most important industries. Our analysts will ensure you find doing business in the UAE is made easy.

Country Risk

United Arab Emirates Country Risk

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Core Views

  • Lower oil prices will hit growth as government spending and consumer confidence falls. We forecast real GDP growth at 2.8% and 2.6% in 2016 and 2017 from an estimated 4.0% in 2015

  • We expect Dubai to outperform Abu Dhabi, with the former benefitting from increased activity in the trade and tourism sectors, as well as lower exposure to oil prices.

  • Credit growth to the private sector will remain relatively slow through 2016 as commercial banks continue to increase provisioning against potential loan losses due to the debt funding cliff.

Key Risks

  • Any attack by Islamist militants would result in a fundamental reappraisal of both the UAE's, and the wider region, risk profile.

  • A further uptick in...

United Arab Emirates Operational Risk Coverage (9)

United Arab Emirates Operational Risk

BMI View:

BMI View: The UAE's crime and security environment is the most conducive to the secure and safe operation of a business in the MENA region. With relatively low crime rates and highly capable police force, businesses can be assured of efficient crime prevention, thus mitigating costs for insurance and additional security measures. Simultaneously, although the region is notoriously unstable, the UAE faces limited risk of terrorist attacks and enjoys open diplomatic channels with neighbouring states within the MENA region. The UAE has a robust security force and well-equipped military. There is a limited presence of organised crime, and although is some risk of exposure to financial...

United Arab Emirates Crime & Security

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The UAE receives a score of 58.8 in the BMI Security Risks ratings, placing it fourth in the region. This score is due to its very low crime rate and correspondingly good policing and rule of law. The costs to businesses from property crime and organised crime are negligible. Furthermore, there are few risks facing foreign workers from developed countries, but there have been increasing concerns regarding the living and working conditions of low-wage migrants from Asia. Partly on the back of this, the UAE lags Oman, Qatar and Kuwait - its Gulf peers- countries which normally compete with the UAE for investment.

The UAE faces a moderate risk of terrorism due more to the country's location rather than inherent challenges. Unlike much of the region however, there have been no major cases of bombings against civilian or military targets on UAE soil. Nevertheless, the UAE could be an attractive target to international...

United Arab Emirates Labour Market

BMI View:

BMI View: Businesses in the UAE must be aware that they will be required to import foreign workers for a wide variety of positions ranging from low-skilled construction labourers to highly-skilled oil and gas workers. This is due to the country's small population, which is relatively poorly educated and remains predominantly employed in the public sector. This entails some significant risks to businesses, mainly stemming from the bureaucratic hurdles and costs associated with importing foreign staff, the lack of flexibility in recruiting from the vast migrant labour pool, and the growing risk of more stringent restrictions on the employment of expatriates. Nevertheless, the UAE's labour market also offers some advantages,...

United Arab Emirates Logistics

BMI View:

BMI View: The UAE has developed a role as a key link in the global supply chain, with its ports and airports serving as major hubs on international trade routes between Europe and Asia. The government has worked hard to promote this position by minimising trade bureaucracy and investing heavily in transport infrastructure, ensuring that the country offers world class facilities at its air and maritime terminals. Congestion remains a key concern for internal supply chains, as there are no alternative options to the road network, however, ongoing investment in railways will mitigate the risk of delays over the medium term. The hydrocarbons wealth enjoyed by the...

United Arab Emirates Trade & Investment

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The United Arab Emirates is one of the most attractive destinations for trade and investment in the Middle East and North Africa (MENA) region. The country possesses a well defined and implemented legislative environment, as well as strong intellectual property rights. We see little in the way of direct trade and investment risk, particularly given government support of pro-market policies.

We have given the UAE a score of 66.3 out of 100 in our Trade and Investment Risks Index, placing the country first out of the 18 countries covered in the MENA region. As one of the largest Arab economies, as well as being well-placed for trade elsewhere, the UAE offers a large market to foreign investors. Moreover, a low tax regime and relatively strong intellectual property rights help to bolster it score. Furthermore, compared with the rest of the Gulf Cooperation Council, the UAE has many incentives to foreign direct investment (FDI) and its tax and...

United Arab Emirates Industry Coverage (30)

Autos

United Arab Emirates Autos

BMI View:

BMI View: The combination of strong consumer demand and a growing population provides an encouraging backdrop for UAE's new vehicle sales prospects in 2016. We are targeting 4.9% sales growth for the sector.

Total Vehicle Sales, United Arab Emirates
(2013-19)
f = BMI forecast. Source: Industry sources, BMI
Key Views
  • 2015 has proved another positive year for UAE new car sales, which should be on track for 420,000 units by...

Commercial Banking

United Arab Emirates Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

United Arab Emirates Consumer Electronics

BMI View:

BMI View: The UAE is a lucrative consumer electronics devices market where high incomes and a culture of consumption are reflected in short replacement cycles and a large share for premium brands. This will continue over the medium term, but growth prospects are limited by the economic downturn as a result of the fall in oil prices in 2014 and 2015. This has filtered through to lower confidence levels and could impact the economy further over the medium term. Reflecting this, we downgraded our forecast for devices spending in Q116 and now envisage a compound annual growth rate of just 0.3% 2016-2019 to USD4.6bn. While the market as a whole has a subdued outlook there are areas of stronger performance, for instance hybrid notebooks in the retail market, and TV set sales as hotel capacity has expanded ahead of the 2020 World Expo....

Defence & Security

United Arab Emirates Defence & Security

BMI View:

BMI View: The UAE's local defence industry is still in the early stages of development, and as such, domestic companies rely on assistance from foreign firms to manufacture sophisticated military equipment. The armed forces' requirements for high-tech naval, air power, missile and surveillance products are therefore predominantly met through imports. However, the government - as part of its economic diversification strategy - is working to expand the local defence industrial base, and is actively encouraging joint ventures (JVs) between international companies and UAE-based entities. The country ranks in the top 15 globally for the size of its defence budget, and we expect further spending growth over our forecast period to 2025, driven by the rising threat from...

Food & Drink

United Arab Emirates Food & Drink

BMI View:

BMI View: We forecast positive growth for the UAE's food and drink industry, driven by a booming consumer outlook. Premiumisation will remain the core driver of the food industry, while a soft drinks tax threatens the non-alcoholic drinks industry. With the rising need for convenience, we expect growth in the mass grocery retail sector to be led by convenience store investment.

Food And Drink Spending
(2013-2020)
...

Freight Transport

United Arab Emirates Freight Transport

BMI View:

BMI View: We expect continued robust growth across the UAE's freight modes in the near term and over our medium-term forecast period to 2020. Massive investment into freight transport infrastructure - not least the development of the UAE's nascent rail network - will ensure that growth in freight volumes continues far beyond our forecast period. This will be driven not only by domestic demand, but will also be massively informed by the UAE's becoming one of the world's foremost global transhipment hubs.

Looking at the UAE's domestic trade growth prospects, we are bullish in both real and nominal terms. Looking first at real growth, we forecast an expansion of 5.1% in total trade in 2016, followed by a further 4.9% in 2017. Imports will outpace exports, at 6.2% to 4.0% in 2016 and 6.0% to 3.7% in 2017. This...

United Arab Emirates Freight Transport

BMI View:

BMI View: UAE's growing economy and improved relations with major trade partners translates into growth for all freight modes in 2016 and over the medium term. Domestic buying power remains strong and, in combination with service expansion of major airlines Emirates and Etihad, air freight will be the fastest growing mode, responding to demand for valuable goods. Road freight is the dominant mode, although this will lose market share when the (under construction) rail network launches in 2018. Oil will remain the country's main export, benefitting the shipping sector that continues to grow...

Information Technology

United Arab Emirates Information Technology

BMI View:

BMI View: The UAE IT market contracted in 2015 as a downturn in hardware spending dragged down the overall market. We envisage a return to growth in 2016 and the growth rate to remain subdued but stable over the medium term. Our forecast envisages a CAGR of 3.6% over 2015-2019 to AED19.2bn in 2019. The hardware market will be challenging as a result of market maturity and economic uncertainty, but we have a brighter outlook for software and services as enterprise and government modernisation initiatives continue. The areas of strongest growth will be cloud services and IoT solutions adoptions, with the UAE a regional leader for both.

Latest Updates & Industry...

Infrastructure

United Arab Emirates Infrastructure

BMI View:

BMI View: Commercial construction and transport infrastructure will draw in significant investment over the first half of our forecast period, in the run up to the World Expo 2020. Dubai will continue as the outperformer, while Abu Dhabi's exposure to low oil prices continues to dent private investor sentiment. Government investment in the sector as a whole will remain robust.

Forecast & Industry Developments

  • The construction industry remains resilient in the face of low oil prices, with Dubai's planned projects in real estate and energy infrastructure progressing well. Abu Dhabi has been more exposed to the commodities downturn, given its economy's reliance on the sector, but still boasts the largest infrastructure investment programme in the...

Insurance

United Arab Emirates Insurance

BMI View:

BMI View: The insurance market in the United Arab Emirates is growing rapidly, bolstered by wider economic growth and an increasingly robust regulatory framework. The non-life market is considerably more developed than the life sector, with higher rates of penetration and density, primarily due to extensive demand for mandatory health insurance by the large expatriate population in the UAE. Life insurance is less established, and again demand is primarily driven by foreign workers unable to access generous state benefits provided to nationals. Both life and non-life are expected to show steady premium growth over our five-year forecast period through to 2019, making this an attractive market for insurance providers, though we note some restrictions on foreign investment remain.

...
Headline Insurance Forecasts (United Arab Emirates 2012-2019)

Medical Devices

United Arab Emirates Medical Devices

BMI View:

BMI Industry View: The United Arab Emirates will remain an attractive market and an important regional hub, despite moderate market growth of 9.3% over the forecast period. Population growth, a changing epidemiological profile, a growing medical tourism industry, continuous healthcare infrastructure developments, an expanding health insurance and increasing health expenditure will be key market drivers. With rising healthcare costs and a period of lower oil prices, the government will attempt to increase private sector participation to stave off the erosion of state revenues.

Headline Industry Forecasts...

Metals

United Arab Emirates Metals

BMI View:

BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

...
Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

United Arab Emirates Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

...
Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

United Arab Emirates Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

...
Global Nickel Forecasts
2013 2014 2015e

United Arab Emirates Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

United Arab Emirates Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

United Arab Emirates Metals

BMI View:

BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

United Arab Emirates Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

...
Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

United Arab Emirates Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

...
BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f

Oil & Gas

United Arab Emirates Oil & Gas

BMI View:

BMI View : While the government will fall short of its 3.5mn b/d production target for 2020, oil production is set for significant growth over the coming three to five years. The outlook on gas is more bearish, due to the high cost and technically challenging nature of the country's non-associated gas resource base. Rising gas reinjection into the UAE's maturing oilfields will also undercut marketable production over the longer term. The consumption outlook for both oil and gas is strong, although ongoing subsidy reform will somewhat temper growth. The UAE will grow increasingly dependent on imports of pipeline gas and LNG across the forecast period. However, it is set to become a net exporter of fuels from 2016 due to the expansion at Ruwais.

...
Headline Forecasts (United Arab Emirates 2014-2020)

Petrochemicals

United Arab Emirates Petrochemicals

BMI View:

The UAE is set to face a challenging year as it doubles output at the massive Borouge petrochemicals complex. The combination of an end to sanctions on Iran, a Chinese slowdown and Saudi Arabia's opening of its massive Sadara complex will work to keep petrochemicals prices low. Meanwhile, the UAE's dominant ethane feedstock will struggle to compete with falling oil-derived naphtha feedstock used by rivals in Asia and Europe.

The Gulf Cooperation Council (GCC) is seeing a slowdown in petrochemicals output growth, which fell to 7.5% in 2015 from 11% CAGR in 2004-2014, and is set to fall to 3.2% on average over the next five years. Constraints in gas supply have been blamed and this tightness in the gas market is leading to upward pressure on ethane costs.

Ethane availability and feedstock pricing will remain key to the growth of the UAE's petrochemical industry. Rising feedstock prices, limited...

Pharmaceuticals & Healthcare

United Arab Emirates Pharmaceuticals & Healthcare

BMI View:

BMI View: The UAE will continue to be an attractive emerging market for pharmaceutical companies as a result of continued investment into the country's healthcare sector. The rising prevalence of chronic diseases, such as diabetes, is prompting both the public and private sector to improve the population's access to healthcare services - this will act as the main driver of pharmaceutical expenditure in the UAE. However, during this period of oil price-driven austerity, the government is more likely to cut back spending on higher-value innovative drugs, posing a risk to multinational drugmakers.

Headline Expenditure Projections

  • Pharmaceuticals: AED9.46bn (USD2.58bn) in 2014 to AED10.32bn (USD2.81bn) in 2015; +9.1% in local currency terms and +9.2% US...

Power

United Arab Emirates Power

BMI View:

BMI View: Our forecast for the UAE power sector remains bullish over the next decade, driven by the government's efforts to expand its power capacity. As corroborated by recent developments, we continue to expect the UAE to focus on expanding its nascent nuclear and solar industries, which will result in these two sectors making a much greater contribution to the country's electricity capacity and generation mix over our forecast period....

Real Estate

United Arab Emirates Real Estate

BMI View:

BMI View: Despite external pressures, demand in the commercial real estate industry is rising. Premium units in the office and retail sub-sectors are witnessing further investor interest; whilst expansion plans in industrial real estate could see rentals rise. We therefore hold optimism for commercial sector growth over 2016, although advice vigilance in light of falling oil prices that will stretch the economy.

The United Arab Emirates holds economic strength through prominent sovereign wealth and further diversification from oil related sectors into contemporary industries over the past few years, more so than the neighbouring Gulf states, with over 40% of GDP contribution coming form services. This indicates resilience to debilitating effects from the global economic cool down, a result of the fiscal struggles in China (a major trade partner) that has undoubtedly led the Arab nation to adopt...

Renewables

United Arab Emirates Renewables

BMI View:

BMI View: The UAE's position as a GCC regional hotspot for solar development will remain unrivalled over our 10-year forecast period, as advantageous climatic conditions, the increasing cost competitiveness of solar power and strong government commitment to power mix diversification drive growth. The strengthening project pipeline is testament to this view.

Renewables Headline Forecasts (United Arab Emirates 2015-2021)
2015e 2016f 2017f 2018f ...

Retail

United Arab Emirates Retail

BMI View:

BMI View: We retain optimistic growth forecasts for the UAE's retail market. The next four years leading to Dubai Expo 2020 will give a boost to the economic diversification, as gargantuan infrastructural and private projects pick up steam. Consumer confidence is likely to remain intact and inbound tourism is set to persist, both of which will continue rewarding retailers with unparalleled opportunities until 2019.

The UAE is highly reliant on oil revenue; as a result, the fall in oil prices during the end of 2014 and beginning of 2015 resulted in a damage to the UAE economy. After a shock, the real GDP increased by 3.9% in 2014, a marked improvement from growth of just 1.6% in 2010. We expect to see real GDP growth reach 4.0% in 2015 and this will bode well for growth in the UAE's retail...

Shipping

United Arab Emirates Shipping

BMI View:

BMI View: The UAE's shipping sector, one of the best developed and most important in the world, will continue to expand rapidly in 2016 and over the medium term. The Dubai port of Jebel Ali is the ninth largest in the world in terms of container throughput, owing largely to transhipment volumes, while the Abu Dhabi facility of Port Khalifa, only launched in late 2012, is expanding rapidly thanks to the KIZAD industrial zone being developed alongside it. It is due to these different sources of growth that we expect Khalifa's growth to far outpace Jebel Ali's in 2016 and beyond. Aside from the base effects of Khalifa still being a relatively newly launched facility, Jebel Ali's reliance on transhipment trade will negatively impact it given our expectation of rocky global growth in 2016, with the eurozone in particular not looking especially healthy.

...

Telecommunications

United Arab Emirates Telecommunications

BMI View:

Latest Updates & Industry Developments

  • In the first nine months of 2015 the UAE mobile market saw a net increase of 542,000 subscribers. This is based on data reported by Etisalat and du, as well as the Telecommunications Regulatory Authority (TRA). We estimate that the total number of mobile subscriptions reached 17.12mn by the end of 2015, equivalent to a penetration rate of 187%. We expect the UAE mobile market to maintain positive growth throughout our forecast period, through to 2020, due to strong competition between Etisalat and du, as well as the continued influx of migrant workers and temporary visitors on the back of an improving economy, a stable political environment and major events in the...

Tourism

United Arab Emirates Tourism

BMI View:

BMI View: The UAE tourism market will continue its healthy expansion over the next five years, with the number of inbound arrivals increasing at an average annual rate of more than 5%. This will be driven primarily by the diversification policy adopted by the two main tourist hubs, Abu Dhabi and Dubai, who will continue to seek to attract new tourist groups such as families, as well as tourists seeking more environmentally friendly or more cultural destinations. This will impact positively on the value of international tourism receipts, which will continue to increase at an average annual rate of approximately 7%.

Key Forecasts (United Arab Emirates 2013-2020)
2013e ...

Water

United Arab Emirates Water

BMI View:

BMI View:  

We have substantially expanded our forecasts this quarter to include a number of new indicators. This data has, in turn, impacted our existing forecasts. Our extraction forecast has been upgraded following the addition of desalinated water production forecasts, a sector where we anticipate strong growth over the coming years. In addition, we have expanded our wastewater forecasts, and have good growth projections for treated wastewater, which will in turn augment the water resources available for consumption, as we anticipate treated wastewater can cater to much of the industrial and agricultural requirements, freeing up freshwater and desalinated water supplies for domestic consumers.

We expect that desalination will continue to provide the lion's share of the country's water supplies. There are concerns that ground water resources will disappear entirely...

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