Boston, MA -- (SBWIRE) -- 07/28/2012 -- We recently revised up our forecasts for 2012 UAE real GDP growth, and are now projecting the economy to expand 3.5% this year, up from last quarter's forecast of 3.0%. This follows an estimated 3.3% rate of expansion posted in 2011. Broadly speaking, the same problems that have been weighing on the economy since 2009 look set to continue over the coming quarters, with weakness in the domestic real estate market, anaemic credit growth and ongoing deleveraging in the private sector tempering our nearterm outlook. The country will also be hit by trade restrictions on Iran, which will also hit volumes at ports. However, the bright outlook for the hydrocarbons sector (with supply fears helping to keep oil prices high) coupled with healthy tourism growth will help the country maintain, if not spectacular, at least healthy, economic expansion. Both of these industries will also support the freight transport sector, with oil and gas and consumer goods passing through the countries' facilities.
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Shipping will be a particular beneficiary of this. Further, the country's ports also benefit from being transhipment facilities for the region, Jebel Ali in particular. Strong growth is forecast by BMI at all of the emirates' major ports despite the headwinds facing the global economy, though we project that this growth rate will slow over our forecast period to 2016.
More vulnerable to the global macroeconomic situation are air freight volumes. The country's largest air port in terms of volumes, Dubai International Airport, has followed a 2011 decline with a further year-onyear drop in Q1 volumes, though it should be noted that the smaller facility of Abu Dhabi has enjoyed double-digit growth.
Headline Industry Data
- 2012 Jebel Ali and Port Rashid total tonnage throughput growth forecast at 6.5%, and to average 5.8% to 2016.
- 2012 air freight tonnes through Dubai airport forecast to grow by 1.1% and to average 5.0% to 2016.
- The UAE's total trade real growth in 2012 forecast to be 8.0%, and to average 7.0% over the medium term, to 2016.
Key Industry Trends
Middle East Fastest Growing Region For Air Freight Thanks To Aggressive Expansion BMI believes that the Middle East will continue its rapid growth in air cargo handling in 2012 as the region's airlines and airports continue to press ahead with rapid growth and expansion. The most recent example of this is the launch of a new service by Saudi Airlines Cargo (Saudia).
DP World Clearing Debts With Proceeds From Strong 2011 And Australian Ports Sale BMI believes that DP World's strong exposure to emerging markets has helped the company enjoy strong profit growth in 2011. The sale of its Australian assets has boosted its financial position, and the fact that the terminals operator plans to pay off US$3bn of debts using existing cash resources in April underlines its strength.
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