The National Bureau of Statistics (NBS) has revised historical real and nominal GDP data. This revision will affect forecasts that rely on GDP growth.

According to the revised data, real GDP fell by 1.6% in 2009. We estimate that the economy grew by 2.1% in 2010 and forecast that GDP growth in 2011 will pick up strongly, to 3.6%, owing to high oil prices and production. Real GDP growth is forecast to average 5% in 2011-15, much higher than the estimated rate of 3.4% in 2006-10-which has changed owing to the revisions in historical GDP data. We have maintained a cautious stance on increasing our oil price forecasts drastically, a view that is supported by the decline in oil prices on May 5th. We estimate that oil prices averaged US$79.6/barrel in 2010 but forecast that they will increase sharply in 2011, to US$101/b. Oil prices will decline gradually thereafter, to US$76/b in 2015, mainly as a result of increased supply from Brazil and Iraq, as well as some OPEC member states, including the UAE. We estimate that world trade grew strongly in 2010, and although it is forecast to slow in 2011-15, it will lead to an increase in non-oil exports for the UAE. The diversification programme will boost the output of the industrial sector, with some major projects expected to come on stream in the forecast period. However, the UAE will continue to rely heavily on the hydrocarbons sector.

High government spending, especially in Abu Dhabi, and improved consumer confidence will help to boost private consumption. Expenditure on infrastructure projects, industry, ports and airports will facilitate non-oil exports towards the end of the forecast period as some projects near completion. An almost tax-free environment, good infrastructure and the opportunity to save will lead to a return to high levels of growth in the immigrant workforce in the forecast period, after a fall in the expatriate population in 2009.

The services sector will also register solid growth. The political uncertainty in the North Africa region will increase tourism to the UAE, partly from tourists who were previously going to Egypt. In the near term, government and oil-related services will continue to expand. In addition, Abu Dhabi will continue to invest in real estate and will also expand its tourism and infrastructure sectors, albeit at a more reasonable pace than originally planned in its long-term strategic plan. Other emirates such as Sharjah and Ras al-Khaimah are also developing tourism. The outlook for financial services, however, remains uncertain in spite of DW securing agreement for its restructuring proposal.

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