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Country Risk Service United Arab Emirates Updater

  • ID: 2101604
  • January 2016
  • Region: United Arab Emirates
  • 21 Pages
  • The Economist Intelligence Unit
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The sovereign risk rating was downgraded from BBB to BB in December. Although the UAE has made progress in debt restructuring since the Dubai debt standstill in 2009 and has large sovereign wealth fund assets, its debt-financing needs continue to weigh on the rating and the continued weakness of oil prices is negative for the fiscal balance, export revenue and economic growth, although the budget will return to surplus in 2017.

The currency risk rating was downgraded from BBB to BB in December. The UAE dirham will be susceptible to fluctuations in the US dollar, to which it is pegged. The strengthening dollar raises the question of whether the peg will undermine competitiveness, but there is little risk of the dirham being de-pegged. The continued weakness of oil prices will keep the previously large current-account surplus relatively low in 2016-17.

Banks' profits have picked up strongly in recent years, with slower growth in provisioning for non-performing loans and faster loan growth. But the outlook for banks is not without challenges, owing to still-high debt exposure to government-related entities, tighter domestic lending regulations and the likely impact of sustained low oil prices on liquidity and economic activity.

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Country Risk Service United Arab Emirates Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2016-20: Political stability

Central scenario for 2016-20: Election watch

Central scenario for 2016-20: International relations

Central scenario for 2016-20: Policy trends

Central scenario for 2016-20: Fiscal policy

Central scenario for 2016-20: Monetary policy

Central scenario for 2016-20: Economic growth

Central scenario for 2016-20: Inflation

Central scenario for 2016-20: Exchange rates

Central scenario for 2016-20: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service

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Note: Product cover images may vary from those shown

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