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Moody’s: UAE economy among top 5 fastest-growing emerging markets

Moody’s: UAE economy among top 5 fastest-growing emerging markets
10 July 2024 09:43

MUSTAFA ABDEL AZIM (ABU DHABI)

Moody’s credit rating agency has ranked the UAE among the top five fastest-growing emerging economies in 2024 and the highest among Middle Eastern economies, expecting GDP to grow by 4.6% this year, up from 3.1% last year. In a report issued on Tuesday on emerging market growth prospects, the agency predicted inflation in the UAE to decline to 2.4% this year, compared to 3.6% last year, suggesting that inflation will continue to decrease to 2.1% next year.

The agency expects the UAE economy to continue its recovery during the coming year and to remain among the six fastest-growing emerging economies at 4.5%, an increase of 0.6% above the average growth rate of emerging market economies of 3.9%. According to the report, India topped Moody’s list of the fastest-growing emerging economies in the world during the current year, with an expected rate of 6.8%, followed by Vietnam with an expected growth of 6%, the Philippines 5.9%, Indonesia 5%, and the UAE 4.6%, the highest rate among emerging market economies in the Middle East.

In terms of its expectations for the economies of the Middle East and Africa, Moody’s predicted the Egyptian economy to record the second-fastest growth rate in the region after the UAE at a rate of 3% this year, before rising to 4.4% next year. This is followed by Nigeria’s economy with a similar growth rate of 3%, Turkey’s economy with a growth of 2.5%, and the Saudi economy with 2.3%, before jumping to 5.1% next year, while the agency expects South Africa’s economy to grow by about 1.3% this year.

The agency explained that it continues to expect steady GDP growth in most emerging markets this year and next, with wide variation within and across regions – in line with its previous emerging market forecasts published in March. The agency indicated that growth is likely to be higher this year compared to last year for just over half of the 23 emerging markets covered by the report due to increased domestic and external demand.

“We have revised our overall emerging market forecast for 2024 and 2025 to 3.9%, slightly up from our previous forecast of 3.7% for 2024 and 3.8% for 2025,” said Vittoria Zoli, an analyst at Moody’s.

The agency expects inflation to fall significantly from its peak in 2023, but progress is slowing in part due to continued high service inflation, noting that actual headline inflation has been higher than expected in recent months, particularly in Latin America and Central and Eastern Europe, with different reasons for each country.

The agency pointed to the slowdown in monetary easing in emerging markets, noting that while further cuts depend on inflation, the US Federal Reserve, and local currencies, the stalling of the decline in inflation is causing a number of emerging market central banks to slow, pause, or delay monetary easing, as is the case with weak or volatile local currencies.

The agency expects that a number of Latin American countries that have started cutting interest rates will continue to maintain their current levels or slow the pace of cuts, noting that countries in other regions that have not yet started cutting interest rates are likely to remain as they are for a longer period, while only a few will continue to cut interest rates or even raise them.
 

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