x Abu Dhabi, UAEFriday 21 July 2017

UAE more ready for economic growth than US or Japan says study

Emirates are 23rd in Goldman Sachs survey, just below the euro area and above developed economies such as the US, Japan and France..

Conditions for economic growth in the UAE and Bahrain are more favourable than in several developed markets, including the US and Japan, says a new study by Goldman Sachs that forecasts per capita GDP growth.

The US investment bank's yearly growth environment scores, which are "designed to capture the main factors known to affect an economy's ability to grow", show Gulf markets racing ahead against a backdrop of financial uncertainty in traditionally strong economies.

The UAE came in at 23rd overall on the ranking of 181 countries, a little below the euro area and above developed economies such as the US, Japan and France. Bahrain was the highest-ranked Gulf state, at 14th worldwide.

The rankings are based on factors such as macro-economic stability, technological development, education, life expectancy, and political and legal stability.

"Developed markets have taken another modest step back in terms of growth conditions (for the second consecutive year), as deteriorating budgets and political conditions have taken their toll," the report said.

In developing economies, by contrast, the key positive factors were macro-economic stability and increased take-up of technology.

Along with other Gulf states, the UAE was placed ahead of emerging markets such as Brazil, Russia, India and China.

At the top of the list were Singapore, Norway and Hong Kong.

"Encouragingly, the poorest countries in Africa and beyond also have generally continued to make progress," the report said.

Developing markets in general benefited from low levels of inflation and external debt, as well as increased adoption of mobile phones and the internet.

"The UAE in particular has come through a particularly radical bust, which has tested its infrastructure to the limit, in particular the legal process relating to default," said Steven Bell, the chief economist at the hedge fund GLC.

Although the UAE suffered during the global financial crisis, particularly in its banking system, prospects for the Emirates and its neighbours are now much improved, Mr Bell said. "The success in achieving emergence from some quite serious financial issues has certainly put the region in a stronger position."

Low levels of inflation in Gulf economies also gave them advantages over emerging markets such as Brazil, India and China, all of which are expected to experience increased inflationary pressures.

ghunter@thenational.ae