The UAE in the Face of The Oil Crisis
Vol. 23, no. 6032, Thursday, May 19, 2016

Recently, several international articles were issues highlighting the performance of the UAE economy and comparing it to other countries in the region and the globe. In an international context marked by economic slowdown, these reports underscored the performance of the UAE and commended the efforts undertaken over the past decades by the country to diversify its economy and production capacity. Now the UAE is reaping the benefits of its economic policies which helped its economy fend off crises and setbacks, despite international pressures resulting from the drop in oil prices and the sluggish economic growth at the global level. These reports also pointed out that the UAE’s economy stands out and remains insulated from the political instability and security turbulences in the Middle East which has led to a drop in foreign direct investments and undermined the region’s attractiveness for tourists.

There is no doubt that the national economy continues to post positive results despite unfavourable regional and international conditions. According to several reports, the performance of the UAE economy represents a clear proof of the soundness of the economic policies implemented in the UAE. In this regards, the Economic Calendar issued a report on its website saying that the UAE is well-placed compared to its neighbours to ward off the repercussions of the slump in oil prices. The report points out to the forecasts put forth by the Institute for International Finance which predicted the growth of the UAE economy despite the impact of the drop in oil prices. The same forecasts where confirmed by Emirates NBD bank which stressed the positive growth prospect of the UAE economy.

Few days ago, the credit rating agency Moody’s has given the UAE an Aa2 in its long-term rating thanks to the solid financial sector of the Emirate of Abu Dhabi which has been implementing diversified foreign investments and accumulating for years colossal foreign reserves. By successfully diversifying its economy and building on the returns of its domestic and foreign investments, the UAE economy was reinvigorated and strengthened against the repercussions of the oil market volatilities.

These reports represent an international recognition of the capabilities of the UAE economy and the robust insurance and financial sector in the country. The current context adds more significance to these reports from different perspectives. These reports underscore the resilience of the UAE economy and the strong foundations on which it is built. In this regards, Moody’s report pointed out that the UAE maintains debt at a low percentage of 18% of the GDP, adding that growth stood at 3.4% in 2015. The agency also forecasted that the financial reserves of the UAE will stay above 130% of the GDP over the upcoming years.

These all are indicators reflective of the potential for growth of the UAE economy whatever the externalities and crises.
 

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