Outlook for 2011-15

• The outlook for the domestic political scene will remain broadly stable, although there is a risk of the UAE becoming embroiled in the dispute over Iran's nuclear programme and being affected by the Arab regime crisis.
• The budget surplus will increase substantially in 2011 owing to a rise in oil prices, boosted by the unrest in the region, before narrowing in 2012. The fiscal account is forecast to post deficits in 2013-15.
• We expect the Central Bank of the UAE to remain focused on increasing liquidity in 2011, but it will also seek to control inflation. It will review future policy under the guidance of a new advisory council.
• We estimate that real GDP grew by 2.1% in 2010. We expect GDP growth to reach 3.6% in 2011 in light of higher oil prices and production. Real GDP growth is forecast to average 5% in 2011-15 as large projects come to fruition.
• Inflation averaged 0.9% in 2010. It is forecast to average 2.2% in 2011-15, well below the highs of 2005-08, owing to a fall in housing costs.
• The current account will remain in surplus in 2011-15, at an average of 4.3% of GDP. The surplus will widen considerably in 2011 as the UAE benefits from unrest in Bahrain. The growth in non-oil exports will increase in 2012-15.

Monthly review

• In late April the crown prince of Abu Dhabi, Sheikh Mohammed bin Zayed al-Nahyan, met the US president, Barack Obama, to discuss the volatile situation in the Middle East.
• The UAE's art scene came under the spotlight in early April after the ruler of Sharjah sacked the curator of the long-standing art biennial because one of the exhibits was offensive to local tastes.
• The Abu Dhabi Urban Council has awarded US$5.7bn worth of contracts during Cityscape, an annual property show. The funds will be used to build 7,500 homes for Emiratis.
• The Dubai government has amended the laws governing the Dubai International Financial Centre (DIFC). The new laws are aimed at improving transparency and co-ordination between the different DIFC entities.
• Mubadala, Abu Dhabi's investment fund, has launched a US$1.5bn bond and announced plans to increase spending fourfold in 2011, to US$16.3bn.
• The Abu Dhabi National Oil Company (ADNOC) and US-based Occidental Petroleum have signed a deal to develop jointly the Shah gasfield. In spite of delays, ADNOC insists that the field will be fully operational by 2014.