UAE Capital Markets Key IndicatorsApril 2018

KEY HEADLINES

• The UAE’s GDP increased by 1.7% in 2017. GDP

growth is expected to gain momentum in 2018

to 3.3% and 3.6% in 2019.

• UAE Purchasing Managers’ Index (PMI) fell to

54.8 in March 2018. Growth of the UAE’s non-

oil private sector eased in February, with

business conditions improving at the weakest

pace since September 2017.

• Inflation has surged to 4.45% as at February

2018. This has been driven by increasing

transportation and consumer goods costs.

• Oil prices have risen to $69.6 pb as at March

2018, up from $53.7 a year earlier - the highest

price since Nov 2014. Increasing demand for oil

and supply management by OPEC has

underpinned growth.

FIGURE 3

Inflation, Y-o-Y % Change

Inflation has surged to 4.45% as at February 2018. This

has been driven by increasing transportation and

consumer goods costs.

FIGURE 4

Oil Prices

Oil prices have risen to $69.6 pb as at March 2018, up

from $53.7 a year earlier - the highest price since Nov

2014. Increasing demand for oil and supply

management by OPEC has underpinned growth.

Latest 3 months ago 12 months ago

Oil Prices – Brent Crude ($) 69.6 66.6 53.7

The UAE’s GDP increased by 1.7% in 2017. GDP

growth is expected to gain momentum in 2018 to

3.3% and 3.6% in 2019.

FIGURE 1

UAE GDP, Y-o-Y % Change

FIGURE 2

Employment Forecasts, Y-o-Y % Change

2017 2018 2019

UAE Employment Forecasts % Change 0.7 1.2 1.5

Employment growth in 2017 registered at 0.7% and is

forecast to rise to 1.2% in 2018 and 1.5% in 2019 as

corporations look to resume hiring plans amid a more

favourable global economic outlook.

FIGURE 5

Purchasing Managers’ Index

Latest 3 months ago 12 months ago

Composite PMI 54.8 57.7 56.2

UAE Purchasing Managers’ Index (PMI) fell to 54.8 in

March 2018. Growth of the UAE’s non-oil private

sector eased in February, with business conditions

improving at the weakest pace since September 2017.

Latest 6 months ago 1 Year ago

CPI Inflation (%) 4.45 1.14 2.67

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RESEARCH

Taimur KhanSenior Analyst

+971 4 4267 660

taimur.khan@knightfrank.com

FIGURE 9

Nominal broad effective exchange rate index, the AED’s performance

against key currencies

1 month 3 months 12 months

Effective Exchange Rate % Change 1.45 -1.97 -6.44

The AED has depreciated 7.2% from January 2017.

For the broader economy this is positive however this

may lead to increased inflation.

FIGURE 10

Abu Dhabi and Dubai Financial Markets, 1 Year % Change

FIGURE 11 – Chart of the month

Country competitiveness 2018

Dubai’s broad index is down 10.7% and Abu Dhabi’s

general index is up 3.2% in the year to Q1 2018.

The UAE ranked 21st in the global context, this is up

from the 2017 position of 26th. There is room for

improvement in certain elements which could help

improve the country’s global profile as a business hub.

FIGURE 7

Interest Rates

Borrowing rates have steadily risen over the last year

due to the Federal Reserve’s rate hikes on the back of

positive economic data.

10th Jan 3 months ago 12 months ago

3-Months EIBOR(%) 2.39 1.76 1.46

6-Months EIBOR(%) 2.60 2.03 1.68

1-Year EIBOR(%) 2.83 2.56 2.20

FIGURE 8

Foreign Exchange Rates

Positive economic data across the Eurozone has

strengthened the Euro against most currencies. Given

the transition agreement between the EU and the UK,

the Pound has strengthened over the last month.

Latest 3 months ago 12 months ago

AED to EUR 4.50 4.41 3.91

AED to GBP 5.15 4.96 4.58

FIGURE 6

Deposits and Loans, Y-o-Y % Change

Year to Nov

20171 Year % Change 1 Year % Change

Deposits 2.4% Credit 0.7%

Year-on-year deposits growth has slowed to 2.4%,

the lowest rate since late 2015. Credit growth has

been positive but moderate over the same period.

Credit growth in 2018 is forecast to increase to 5%.

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