UAE most stable country economically, politically By Dubai Business Minds :: UAE Business News Oct 25, 2004, 11:52

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UAE most stable country economically, politically

United Arab Emirates

The UAE has the highest rating than countries like Bahrain which has 67.8, Oman 67, Kuwait 64.9, Turkey 60.5, Egypt 59.8, Saudi Arabia 54.6, Jordan 53.6, Iran 44.5, Iraq 43.2 and Lebanon 40.8. The Business Environment Rating average for the region is 58.6; emerging market average is 53.4, while global market average is 58.1.

In terms of short-term political risk, the UAE is the country, which does not face any short-term political risk, which helped it clinching a top slot in the Gulf region with highest rating of 87. The country ranks third, says a latest risk assessment made by Business Monitor International comparing with the regional countries.

The UAE is followed by Kuwait, which has a rating of 85, and a seventh ranking followed by Saudi Arabia, which has a rating of 55 and ranking 104. Iran has the lowest rating in the Arabian Gulf region with a poorest ranking of 119.

Same is the positive scenario of short-term economic risk for the UAE, as the country has won a rating of 81 and ranking of nine, the second best in the Arabian Gulf region, after Kuwait. Kuwait has a rating of 82 and a ranking of six, while Saudi Arabia has been rated as third in the region with a rating of 77, and a ranking of 21.

The UAE's oil output rose to 2.45 million barrel per day in August, 11.4 per cent above the BMI forecast average production of 2.2 million barrel per day. With the OPEC basket averaging $34.2 barrel in the year to September, according to BMI, there is now a clear upside risk to BMI's short term economic rating.

Furthermore, while oil prices are likely to dissipate over the medium term-notwithstanding the risk to Iraqi and Russian supply-there seems little reason to suppose that the UAE's increasingly diversified economy will slow down substantially over the medium term.

BMI has given a short term rating of 81to the UAE, with the risks firmly weighted to the upside.

The country has proved itself capable of maintaining high levels of expansion without generating significant inflation. This is likely to continue over the forecast period with a combination of strong oil revenues and high investment rates likely to result in the steady strengthening of the economy.

However, theUS trade and fiscal deficits continue to expand rapidly which suggests that the US dollar could weaken over the medium term. While a gradual depreciation is the most likely scenario, a rapid fall cannot be ruled out, which, given that the UAE dirham is pegged to the US dollar would increase imported prices.

BY HASEEB HAIDER

Article originally published by Khaleej Times 25-Oct-04

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