UAE macro | Can the commitment to reformation forge the path to recovery amid a stronger USD?
Positive on UAE growth; Consumption and trade key beneficiaries. As a result of the UAE’s commitment to reformation, including fiscal consolidation, labour market flexibility, and a strategic Emiratisation agenda, we expect private consumption growth of 8.5% in 2022 from a cautious pick-up of 3.0% in 2021e, despite the outlook for a stronger USD, and forecast the UAE’s real GDP growth at 4.8% in 2022 (non-oil GDP growth of 3.8%) and 3.2% in 2023, up from 1.6% in 2021e. We expect trade prospects will widen the current account surplus to a healthy 12.4% of GDP in 2022 vs. 8.4% in 2021e, driven by oil and increased efforts to boost trade.
Improved hydrocarbon dynamics to empower Abu Dhabi’s firepower. Higher oil proceeds, supported by the Jul-21 OPEC+ agreement should restore production to 3.08mn/bpd, pushing the UAE’s oil-GDP to 7.5% in 2022e (at USD82/bbl oil) vs. -2.3% in 2021e. Favourable oil dynamics should support ADNOC’s bid to: i) expand production capacity to 5mn/bpd by 2030 vs. the current 4mn/bpd, and ii) boost oil-related investments and refinery projects. Spill over of profits transfers from ADNOC to ADIA will empower the SWF’s diversified portfolio in preparation for a long-term investment drive. We forecast healthy credit growth of 2.9% in 2022, up from 1.8% in 2021e, on improved business sentiment. A solid improvement in liquidity, on higher oil proceeds, should help this scenario materialise. We forecast Abu Dhabi’s real GDP growth at 5.2% in 2022e vs. 0.7% in 2021e.
Ahead of the pack, on strong reform momentum supportive to Dubai. Challenges of a stronger USD on imminent Fed rate hikes in 2022 should be partially weathered by localization reforms that cater to Dubai’s core service-driven economy. Efforts directed to reduce vulnerability to external shocks should expand growth potential beyond a cyclical rebound and mitigate debt repayment challenges of GREs, in our view. They also place the UAE at the forefront of a viable non-oil economy among peers. Future-oriented tourism strategies should accelerate recovery beyond Expo in 1Q22. We forecast Dubai’s real GDP growth at 4.4% in 2022 vs. 2.5% in 2021e.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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