UAE economy slowdown in 2015

Analysts estimate that the United Arab Emirates (UAE) economic growth will hit a slowdown period in 2015. According to expert analysts, the UAE will experience the lowest growth rate it has experienced in the last six years.

Analysts use the economic term Soft Landing to describe the UAE’s growth rate. Soft Landing is defined as a slowdown period, which does not aggravate or worsen unemployment or inflation rates of an economy.

Based on analysts’ opinions, the UAE’s economic activities have started to demonstrate signs it is weakening. The UAE is said to face a slowdown period mainly due to the fluctuation of oil prices, which has led to loss of revenues. This fact will inevitably lead to less domestic spending.

In line with the International Monetary Fund (IMF), the UAE will mark a 3% economic growth rate in 2015. The IMF’s initial projections stated the UAE would mark a 4.6% economic growth rate. However, the figure was reevaluated because of the decline in oil prices, which is said will influence the UAE’s the corporate and real estate activity.

Additionally, the government plans to cut down on spending and increase taxes. Both these factors will influence the UAE’s economic growth rate. Some expect the UAE’s GDP rate will fluctuate between 3.5%-4% whereas others project the rate will go as low as 2% in 2015. Overall, economists anticipate the GDP will be lower in 2015 in comparison to 2014.

It is a fact the UAE’s economy is experiencing a slowdown period. On a bright note, the economy is still growing at a healthy rate. As economists confirm, it is better for a country to experience a steady and reasonable economic growth rather than rapid booms and crashes.

 In comparison to other countries in the region, the UAE has created the most diversified economy. In particular, Dubai has succeeded in moving away from the oil sector, creating a diversified economy. Even though Dubai is not as dependent on oil as it once was, the plunge of oil prices has influenced the emirate’s real estate sales, banking liquidity flows, consumer spending as well as the corporate and consumer morale.

Analysts point out that the UAE may reinforce its economic growth through the increase of oil output and state investments. However, the UAE’s home and export demand for oil will influence the economy because oil prices more than halved in 2014.

It is expected that the UAE economic growth rate will fall by 1% every year until 2020 due to government spending cut downs.