2014 will see a relatively higher growth in the developing economies, a continuation of real growth in the US, and a very low growth in Europe. In the US, the pattern of public-sector underinvestment will remain. Structural rebalancing in Europe will take time and prospective growth will be very low in and beyond 2014.
Growth in Europe at this expected low level is insufficient to reduce high levels of unemployment, currently at 12 percent on average across for the euro zone. Youth unemployment that averages nearly 24 percent and exceeds 35 percent in several countries, represents a critical threat to Europe’s future and leaders need to make a better case for a faster move towards economic and political union.
Austerity measures are undermining the readiness of Europeans to accept the deeper union that is needed to redress Europe’s economic challenges. Parliamentary elections in 2014 are likely to bring a strong anti-austerity vote. Countries like Greece and Portugal will find it hard to sustain support for their austerity programmes.
European leaders must restore growth before markets lose confidence in the reform process again. They need to make a better case for a faster move to economic and political union. Failure to do so could make 2014 the year the crisis returns once more.
China has announced a change in its economic strategy with the expected growth pattern to shift to a sustainable one directly affected by the higher income levels in the economy.
GCC countries, having experienced two years of sustained economic growth, are expected to slow down in 2014 with the UAE and Saudi Arabia driving this growth. The current account surplus, and large foreign exchange reserves, will remain satisfactory. The expected oil production decline in 2014 will result in a slight budget surplus decrease, which should be partially offset by an increase in non-oil exports.
The GCC countries and specifically Saudi Arabia and the UAE will continue to reduce their dependence on petroleum products. The UAE’s share related to oil as a percentage of the GDP will continue to decline in 2014.
The prospects of long-term stability in the region will maintain Dubai’s position as the region’s leading service hub. Abu Dhabi and Dubai will continue to diversify their trading partners by focusing increasingly on Asian markets, reducing the share of oil exports to developed countries and increasing non-oil exports. They will continue to identify opportunities in North African countries and Turkey. Southern Europe will also represent solid opportunities for non-oil exports.
The UAE’s economic growth will be driven by investments, trade, tourism and logistics support with an expected GDP to reach $410bn in 2014. There will be a continued recovery in construction and real estate as well as ongoing growth in tourism-oriented sectors. Inflation will reach around 2.5 percent. UAE’s domestic investments will rise to 17 percent of GDP in 2014 compared to 14.2 percent for 2012. 2013 was a better year economically than 2012 and 2014 is expected to continue in the same direction provided confidence is maintained.
Follow us on
