UAE economy set to expand 2.9% in 2016

Standard Chartered Bank has forecasted the UAE economy will grow by 2.9 per cent in 2016 from an estimated 3.5 per cent in 2015, as oil prices continue to slide.
A slower global economic growth and US shale oil production combined with other factors caused oversupply that plunged Brent crude prices to $37 a barrel on Tuesday from more than $100 a barrel in June 2014.
Last month, the UAE Economy Minister Sultan bin Saeed Al Mansouri saw the economy growing between three and 3.5 per cent in 2016.
For 2015, he was hopeful that it will be in the same range of three-3.5 per cent.
"We see limited further upside to Abu Dhabi's oil production in 2016 after it increased production by seven per cent year-on-year in September 2015 to 2.9 million barrel a day, " said Carla Slim, economist Mena at Standard Chartered Bank.
The bank in a research note forecast said that real GDP growth will pick-up to 3.6 per cent in
2017 on higher oil prices. The oil sector accelerated in the first three quarters of the year, an attempt to offset oil revenue losses and support real economic growth, it said. Output declined to 2.9 million barrels per day from its July high of three million barrels per day; this suggests that current levels are close to full capacity.
Abu Dhabi has announced plans to increase oil output to 3.5 million barrels a day in 2018.
Abu Dhabi's gross domestic product is expected to grow by 5.2 per cent in 2015 and four per cent in 2016.
On credit expansion in 2016, Carla Slim expected it to average four per cent in 2016.
Bank credit growth to the private sector slowed to five per cent year on year in September from 10 per cent in March, she said.
In November, the Central Bank of the UAE said public sector corporations or government related enterprises who are involved in business and commercial activities showed a growth of 4.6 per cent year on year and 3.7 per cent in the first 11 months of the year.
The private sector showed an appetite for credit, with 5.4 per cent rise in lending year on year in November reaching a level of Dh1.1017 trillion.
The private sector borrowing was up 8.3 per cent in the January to November period, while gross credit grew 8.1 per cent, the central bank said.
On inflation, the Standard Chartered research note maintained 2016 average inflation forecast at 4.3 per cent. The UAE inflation was 4.29 per cent year on year, down from 4.94 per cent in August.
- haseeb@khaleejtimes.com