Market Report, "United Arab Emirates Business Forecast Report Q2 2013", published

New Country Reports market report from Business Monitor International: "United Arab Emirates Business Forecast Report Q2 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 19 February 2013

Core Views - Deleveraging will remain a prominent theme well into 2013, as corporates continue to focus on repairing their balance sheets. This will limit activity in the non-hydrocarbon economy.

The outlook for Dubai has become slightly more promising relative to that for Abu Dhabi, with the former benefitting from increased activity in the trade and tourism sectors, in addition to the beginnings of a recovery in the all-important real estate industry.

Major Forecast Changes

We have revised our core real GDP growth forecasts, and are now projecting the economy to expand 3.7% and 3.8% in 2013 and 2014 respectively.

Key Risks To Outlook

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

A further uptick in tensions between the West and Iran could result in a deterioration in the UAE's sovereign risk profile, given the close proximity and deep trade ties between the two countries.

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With global growth slowing, downside risks to oil prices in 2013 are elevated, which could undermine the UAE's already fragile macroeconomic recovery.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Key Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Threat Of Islamist Militancy Rising

- The threat of Islamist militancy in the UAE is likely to increase over the coming years. Growing income inequalities and stark divisions in the social backdrop between Dubai on one hand, and the northern emirates on the other, will be a particularly pertinent flashpoint for instability. Although by no means our core scenario, any successful attack by Islamist militants in the UAE would have significant consequences for the entire region, particularly given the country's 'safe haven' status.

TABLE: POLITICAL OVERVIEW

Long-Term Political Outlook

Three Challenges For The Coming Decade

- The UAE is not without its challenges. However, it is one of the more stable Gulf states over the long term, with a small, wealthy population, no history of terrorism and no sectarian tensions to speak of.

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

2013 Macro Outlook Remains Promising - We are projecting the UAE economy to expand by 3.7% in real terms in 2013, down only slightly from an estimated 3.9% rate of expansion in 2012.

External Debt

2014 Funding Cliff Looms Large - The technical default by Sharjah-based Dana Gas on its US$920mn sukuk on October 31 is a highly symbolic development, and serves to underscore that the UAE's debt overhang lingers..

TABLE: ABU DHABI MATURING BONDS AND SYNDICATED LOANS

TABLE: DUBAI MATURING BONDS AND SYNDICATED LOANS

Economic Activity II

BMI On The Ground: From Strength To Strength?

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