Highlights:
- Non-oil sector growth slowed in February, with PMI declining to 55.1, the lowest since September 2017. Overall, we expect the non-oil sectors of the UAE to grow at a faster rate in 2018 as government increases spending on infrastructure projects and also on public sector wages and transfers.
- Demand for business credit has increased moderately in Q4 2017, according to the latest credit sentiment survey by UAE Central Bank. By loan type, the modest increase in demand for loans is most evident in conventional loans and large firms.
- Defense spending was resilient across the GCC for yet another year in 2016. We expect military spending to have increased in 2017 as oil recovers and GCC military commitments continue.
- With the impact of Artificial Intelligence (AI) being increasingly disruptive for governments and businesses globally, AI is expected to contribute up to USD 15.7 trillion to the global economy by 2030.
- The biggest opportunity for AI in the GCC is in the construction and manufacturing sector where it is estimated that 31.0% of all AI investment in the region predicted for 2030 will be spent on developing AI solutions.
- The headline Dubai Economy Tracker Index (DET) eased slightly to 55.8 in February, but still indicated a strong expansion in the non-oil private sector last month.
- Card spending in the UAE was 14.8% higher in 2017 compared with the previous year. The impact of the Qatar blockade in June last year was quite apparent with Qatari foreign spending falling -41.6% y/y in 2017.
- The latest data on Dubai’s residential real estate prices (Phidar Advisory’s 9/5 House Price Index) show than on average prices fell another -4.6% in 2017. The total decline since the 2014 peak is -23.4%.
- Given the more upbeat outlook for the GCC economies, oil prices, VAT exception for residential transactions as well as better global growth prospects, we expect the downside for residential real estate to be limited this year.
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Emirates NBD Research