Reversing Oil Prices And What It Means To Dubai Property
Economic growth in the UAE is expected to accelerate in 2018. Growth is expected to increase to 4.4% as overall growth in the global economy is expected to pick up too thanks to the steam that the past year has left behind due to the rebound in trade, manufacturing, and investment.
With the books for the fourth quarter of 2017 now drawing to a close, a reflection on the last quarter is in order. It is quite clear that many huge political events that occurred in the west along with the limitation to oil production due to OPEC controls have all resulted in putting a lot of pressure on the UAE market. In fact, it has even spooked a number of players too.
The question that still lingers in everybody’s mind is why the market experienced a downward spiral in 2017. As it turns out, the macroeconomics of the past year all boiled down to the effects of supply and demand and largely due to world affairs.
For 2018, it is expected that the UAE market is going to experience growth, accelerating to a total of 4.4%. This is thanks to the rest of the global economy picking up steam from the largely dismal performance for 2017. According to IMF, a rebound on investment, trade, and manufacturing are to be credited.
The IMF is raising its overall outlook for the world economy for 2018. In the latest World Economic Outlook reports, IMF states that for this year, the outlook for growth is expected to reach a total increase of 3.6%. The financial markets are expected to be more buoyant this year and the cyclical recovery for trade and manufacturing, which has long since been awaited, will finally be underway.
Stronger activity is expected next year. There is also going to be a more robust demand all over the globe and the agreed restrictions that are imposed on oil supply is going to contribute immensely towards the recovery of the oil prices from its trough- something that was immensely prevalent back in 2016.
Of the seven countries involved in oil exports in the Middle East, the growth forecast for the real GDP of the UAE is considered as the fastest in the region. The forecast was cut to just 1.5% back in 2017. However, the IMF stated that it is seen to accelerate up to 4.4% for this year.
The economy of the UAE has remained resilient despite the impact of the oil price slump thanks to its largely diverse economy, political stability, ample foreign asset, and excellent infrastructure. Revenues have been further diversified when the 5% VAT was introduced.
While oil does play a big role in the availability of funds from banks that are necessary for approving credits, the impact of the oil price activity may not be that significant at all. From the point of view of the buyers, this means a good time to invest in property in Dubai. There is expected to be steady yields and the prices are lower too. Only when the price for oil really starts to rebound will there finally be a positive impact on the overall real estate prices.
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