Monetary outlook in UAE economy remains weak. This suggests a weak economic situation and financial struggles after the decline of property market boom. The UAE has slow growth in lending and preference in liquidity. This is due to uncertainties in the market and low rates of interests (NBK Economic Research 26).
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The region has also experienced weak demands, challenges with a corporate sector debt restructuring and issues with the asset quality. These factors have reduced the growth in credit. However, the end year figures show slight growths in loans and advances (two to three percent y/y). The region has experienced increased in provisions for non-performing loans by 30 percent. Experts expect this figure to increase in 2013 due to weaknesses in the property market and challenges with corporate debt restructuring (Mishkin 67).
The GCC mainly relies on oil revenues. Slight changes in the international crude oil prices affect government spending in the GCC member states. Thus, the region should diverse into other non-oil sectors.
The economic outlooks and conditions of the GCC, OPEC, and UAE show that markets performance may not always follow economic fundamentals. This is because markets are subject to other factors rather than economic principles. For instance, tensions in MENA and Iran have affected the OPEC oil demands forecast. Such unstable conditions create difficulties for investors in the GCC region. In addition, investors should rely on specific economic conditions, market information, geopolitical environments, and positive market sentiments in order to make successful investments.
Abdullah, Talal. “Volatile period – GCC stock markets witnessed challenging year in 2009.” Global Arab Network, 2010 (2009): 1. Print.
Al-Hassana, Abduallah, Fernando Delgadoa and Mohammed Omranb. “The under- pricing of IPOs in the Gulf cooperation council countries.” Research in International Business and Finance, 24 (2010): 344–360. Print.
Lawler, Alex. OPEC oil output drops as sanctions hit Iran. Web.
Mishkin, Frederic. Economics of Money, Banking, and Financial Markets. New York: Prentice Hall, 2009. Print.
NBK Economic Research. GCC Economic Outlook, 2012. Kuwait: NBK. Print.
Samba Financial Group. The GCC: Economic Outlook 2012. Riyadh: Samba. Print.