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February 2, 2017 | 11:35 | Dubai
The outlook for the UAE remains positive in 2017 as oil prices are expected to regain some of the losses recorded. This is expected to boost government revenues and increase spending, particularly on infrastructure and development projects. In light of this, preparations for the Expo 2020 are likely to go ahead in full steam, with investments focused on the expansion of the metro, airport and roads network along with tourism facilities and real estate. Investments in these sectors are expected to support the overall growth of the economy.
However given the UAE’s position as a regional hub, Knight Frank remains cautious of external challenges which may hinder economic growth. Any decision by the US Federal Reserve to increase the interest rates further will strengthen the USD and consequently the UAE Dirham. This will likely put pressure on the cost of living and challenge the competitiveness of the UAE as an international tourist and retail destination.
In addition, on-going political uncertainties are likely to impact the performance of financial markets, which in turn will dent investor sentiment and appetite. Among these are the new US administration and any potential protectionist measures, Brexit and the expected trigger of article 50 in March, and a stream of elections across many EU countries (France in May, Germany in September).