Will 2015 witness change in UAE expats map?! . . . . . . . . . . . .While the UAE and other Gulf states have been an attraction to foreign workers, given the free taxes on personal income, but with the recent fall in OIL PRICES the expatriates map may change. Perhaps there are two main reasons for a possible change in the expats ethnicity starting from next year. The first is the drop in global crude prices to the lowest level since 2099 and its impact on the outlook for growth. Second, the recent progress in some economies, mores specifically the United States and the United Kingdom, where expats could decide to come back to their home or go to one of the previously mentioned destinations on strong recovery expectations. Meanwhile, the UAE is home to more than 150,000 British workers, constituting the largest western expatriate community in the Middle East. Some analysts may claim that not all foreign expats are working in the oil industry, yet the revenues generated from oil-exports revenues mainly trigger growth in the GCC. Brent crude for February delivery is currently trading around $59.90 a barrel, compared to $115 level recorded in June. An average OIL PRICE of $65 per barrel next year would shave GCC growth by 13 percent, while the whole region will post a current account shortfall, according to Middle East Economic Digest. Accordingly, government spending will retreat, especially salaries for expats working in government institutions. A 49.1 billion-dirham budget was approved on Tuesday in the UAE, including a 2.9 billion increase from last year, noting that more than 80 percent of most federal agencies’ budget were allocated to salaries. “Firm limits need to be placed on public sector jobs and wages, and it should be clearly communicated to people that they should not expect to obtain a public sector job,” said the International Monetary Fund. However, Dubai, the most populated emirate, is not relying on oil windfalls since its participation in the total UAE oil exports does not exceed 4 percent. Dubai is a financial services hub and depends on tourism and other industries in generating revenues. Despite that, Dubai’s financial market has been hit hardly this year amid the impeccable fall in OIL PRICES, where the key stock gauge plunged more than 7 percent earlier this month. Hence, it is reasonable to claim that Dubai was also affected by the fall in crude prices, so more effect is predicted to take place in heavy producing oil states such as Abu Dhabi, Saudi Arabia and Qatar. UAE PMI data showed that the non-oil private sector narrowed expansion to 58.3 in October from 61.2 in September. A reading above 50 indicates expansion while below 50 means contraction. Although GCC countries will mainly rely on the huge reserves built over the recent couple of years to FINANCE any current account deficit, the governments may consider slashing spending and raising taxes. In the UAE, the government has already considered taxing remittances, where Indian subcontinent sent an estimated £8bn to their home countries last year, thanks to the significant weakness in the value of the rupee. Another problem that may face expats is the high inflation on the back of the rising housing and utility costs. A survey showed that nearly four out of five UAE residents believe that their current savings will not meet their future needs, as the rise in housing costs would push residents into deeper debt. On the other hand, Western expats may find better jobs in the U.S. and U.K., as the recent data showed they are moving on the right track of recovery. Nevertheless, if this occurred, the gap will be replace by expats from the MENA region due to the political instability encountering many countries on the region. UAE to remain an attraction spot for foreign workers Now, there is more diversification in growth trends as now Dubai is focusing on hospitality and education, while Abu Dhabi is diving into areas such as petrochemicals, logistics, financial services, aviation, renewable energy, and cultural tourism. The megaprojects announced over the past 18 months, especially in Dubai, are also predicted to be key attraction for more capital inflows. The Expo hosted by Dubai in 2020 has created a boost in capital inflows on expected increase in tourism and INVESTMENTS. In addition, although Dubai has been heavily incorporated in the 2007-2008 global financial crisis, the economy has showed significant signs of economic and financial recovery. The second-biggest Arab economy will expand 4.8 percent in 2014 and 4.5 percent next year, the IMF predicted in October. #egyptyard
Posted on: Mon, 29 Dec 2014 15:50:28 +0000
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