United Arab Emirates

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Eco Emerging

United Arab Emirates : The challenge of the low-carbon transition
05/03/2024 • By Pascal DEVAUX

The economy of the United Arab Emirates (UAE) is still one of the most dynamic in the region. The strong performances are due to the UAE's sectoral diversification and the attractiveness of Dubai to tourists and investors. Despite the tense geopolitical environment, the short-term outlook is bright, as hydrocarbon production is expected to increase and the steady growth in services and real estate is expected to continue. However, geopolitical risk, oil market uncertainties and US monetary policy are all factors that could threaten this outlook. Uncertainty about the pace and scope of the low-carbon transition is making the longer-term outlook much more uncertain

Eco Emerging

An uneven economic recovery
10/12/2021 • By Pascal DEVAUX

The United Arab Emirates (UAE) was hit by a twin shock with the fall in oil prices in 2020 and the pandemic’s impact on the services sector. The 2020 recession was severe, and the recovery this year is expected to be mild. Despite the positive prospects of the World Expo, Dubai’s economic activity will continue to be restrained by structural difficulties in the real estate market and uncertainty in the tourism and logistics sectors, which are unlikely to return to normal before 2023. Against this backdrop, public finances and the external accounts remain very favourable thanks to the accumulation of years of surpluses, but credit risk is on the rise

Eco Emerging

Towards a new crisis in Dubai?
04/13/2020 • By Pascal DEVAUX

As the most diversified economy of the Gulf countries and a major oil producer, the United Arab Emirates faces a double shock: the economic fallout of the COVID-19 pandemic and plummeting oil prices. The current situation risks accelerating the real estate market crisis in Dubai, which has been developing for several years, eroding the financial health of companies in the construction and services sectors. As credit risk rises, it will place a negative strain on banks. Although public finances seem healthy enough to handle the decline in oil revenues, public debt is bound to rise. The UAE’s solid external position guarantees the dirham’s peg to the US dollar.

The United Arab Emirates (UAE) is a federation of seven emirates: Abou Dabi, Ajman, Charjah, Dubaï, Fujaïrah, Ras el Khaïmah and Oumm al Qaïwaïn. Its federal capital is the city of Abu Dabi. The domestic political situation is stable. The AED peg to the USD is supported by this large positive net external position.

It is dominated by Abu Dhabi, which holds large hydrocarbon reserves, and Dubai, which enjoys the most diversified economy (service-based) in the Gulf.

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Abu Dhabi has the strongest economy in the GCC region and has the capacity to cope with the dual crises of COVID-19 and the drop in oil prices. For several years, a prudent economic policy and the tightening of prudential rules in the banking sector have reduced economic volatility of the leading emirates of the federation.

Dubai has faced difficult times since 2020 as the COVID-19- linked crisis is taking place in an already weakened economic environment, and Dubai’s strategic economic sectors are highly exposed to the consequences of the pandemic (tourism, logistic).

The United Arab Emirates is a member of the Gulf Cooperation Council (GCC).