Growth in construction, tourism, and manufacturing and expectation of budget deficit reductions prompt ratings agency to reaffirm a stable outlook
Sharjah’s economy is poised to record accelerating GDP growth owing to increasing activity in its real estate and construction sectors as well as spillover effects from investment in Dubai’s Expo 2020, according to ratings agency S&P Global.
Despite a narrow tax base and nascent institutional development, a relatively high degree of economic diversity, stability and the ability to drive advantages from its proximity to other growing economies in the Gulf will all contribute to Sharjah’s GDP growth rate which is expected to peak at 2.5 percent in 2020.
S&P global cut Sharjah’s outlook to a BBB+/Stable/A-2 rating last year owing to a build-up in government caused by growing government budget deficits.
However, the current stable outlook “reflects our expectation that Sharjah will reduce its government budget deficits in the next two years,” the agency said in its most recent report.
Sharjah’s rating could improve if the government were able to enact expenditure controls and “debt-servicing costs fell below 5% of government revenues,” the agency added.