Macroeconomic Forecast UAE

We believe that the UAE economy will record 1.8% real growth in 2010, mainly driven by infrastructure and oil and gas sectors, but remain concerned regarding the weak domestic demand outlook. The country's exposure to external markets, with Dubai's port and airport infrastructure and favourable regulatory environment as a particular attraction, will play out well so long as Asia and other emerging markets provide demand. However, in the context of growing concerns about a major real estate market correction in China, this dependence on external players is worrying. A decrease in trade flows through Dubai could impact heavily on financial and fiscal stability.

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