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The collapse of international oil prices since mid-2014 has caused an economic slowdown in the UAE, even in the more-diversified emirate of Dubai, the financial hub of the Gulf.
National Bank of Kuwait (NBK) in its economic update based on UAE statistics said this week that Dubai’s real GDP growth slowed down from 4.2% year-on-year in Q3 15 to 3.1% y-on-y in Q4 15. For the year 2015 as a whole NBK said that Dubai GDP recorded a “still decent growth rate of 4.1% y-on-y” thanks to moderate gains in the non-oil economy. In contrast Abu Dhabi’s real GDP witnessed an uptick in Q4 15, rising by 7.7% y-o-y, versus 5.2% y-o-y in Q3 15, due to strong growth in the non-oil economy. The IMF also projects a downturn in its recently-published Article IV consultation with the UAE. Real GDP growth rate in 2016 is projected to fall to 2.3% from an estimated 4% in 2015, primarily due to the hydrocarbon sector’s woes. But non-hydrocarbon GDP is also projected to fall to 2.4% in 2016 from 3.7% in 2015 due to a contraction of public investment stemming from fiscal consolidation and falling private demand.
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