12
ANNUAL REPORT 2015
ECONOMIC DEVELOPMENTS
Unemployment and Inflation
Currently, inflation is moderating due to the
decelerating prices of food, services and imported
goods. The UAE National Bureau of Statistics figures
show low rates of inflation over the past four years,
from 1.0 per cent in 2013, to 1.1 per cent in 2014,
increasing slightly to 1.4 per cent in 2015 and
projected tobe just 1.50per cent in2016, decreasing
slightly in 2017 to 1.4 per cent.
While dispensing with energy subsidies will
have had a small impact on household incomes,
as will a flat lining salary increase, increased
competition in the open market will continue
to help cap inflation and keep the CPI on an
even keel.
The employment slowdown showed signs of
abating towards the end of 2015 with available
jobs increasing by four per cent. Year-on-year
market growth showed a marginal decrease:
when compared to 2014, the UAE saw a fall of
three per cent in 2015 in the number of new jobs
available in the professional hiring market.
Macroeconomic Outlook
Across the Middle East robust improvement in
consumption demand, generous Government
support, and a rise in public sector infrastructure
spending resulted in steady growth in 2015.
The region is anticipated to witness around
five per cent growth due to the gradual shift in
investment to non-oil sectors. Steady inflation
will bolster private consumption and further
support the region’s progress.
Therefore, the current deficit is unlikely to
affect the country's strong financial position
with strong buffers being built up over the
years, an expected increase in the volume
of oil production and the UAE’s successful
diversification efforts, moving away from
hydrocarbon dependency and growing a
competitive service sector.
The leadership, commentators and analysts
are on record hoping that the oil prices will rise
in the year 2016; and Moody’s Investors Service
expects non-residential construction, tourism,
trade and financial services to boost economic
growth in 2016. It stated it expects the UAE
will return to budget surpluses in 2017 owing
to recovering oil prices and a planned increase
in production levels. These measures mean that
by 2017, the UAE Government is likely to record
a budget with surpluses growing during the rest
of the decade.
Under wise governance, the UAE has prepared
for tougher times, building up buffers, diversifying
the economy and budgeting accordingly. GCC
economies are likely to stabilise over 2016, and will
not decline further, particularly if oil prices continue
to move upward; the Chinese economy contraction
remains manageable, and there is no more than one
other US Fed rate increase.
