Emirates NBD PJSC, Dubai’s biggest bank, raised its estimates for economic growth in the United Arab Emirates this year to 4.4 percent, aided by an increase in oil output.
The forecast was raised from 3.8 percent, putting the second-biggest Arab economy on track for a higher growth rate than Saudi Arabia for the first time in at least four years, according to the bank’s quarterly economic report released yesterday. Emirates NBD lowered its forecast for Saudi economic growth to 3.9 percent from 5 percent after lower-than-anticipated expansion in non-oil industries during the first half of the year.
Even if U.A.E. oil production stabilizes at the current 2.9 million barrels a day, “the hydrocarbon sector is likely to contribute positively to overall gross domestic product growth this year,” economists Khatija Haque and Jean Paul Pigat, wrote in the report. Perhaps more important than the actual growth rate, “is the direction of change in the forecast,” they said.
Emirates NBD joins banks such as HSBC Holdings Plc and National Bank of Abu Dhabi PJSC in identifying growing momentum in the U.A.E. economy, which had lagged behind other countries in the region since Dubai’s 2009 debt crisis. The International Monetary Fund also raised its growth forecast for the country’s economy this month, to 4 percent from 3.1 percent.
Dubai’s benchmark DFM General Index of stocks has surged 79 percent this year, making it the best performer among 93 global indexes tracked by Bloomberg. Abu Dhabi’s gauge has gained 48 percent.
The U.A.E. sits on about 6 percent of the world’s proven oil reserves. Economy Minister Sultan Al Mansoori said last month he expects gross domestic product to expand as much as 4.5 percent this year. The HSBC United Arab Emirates Purchasing Managers’ Index was 54.5 in August, compared with 57.7 in Saudi Arabia, the biggest Arab economy.