Marked and continuous improvement in several key institutional areas over past five years noted…
The UAE ranks in the 85th percentile globally in terms of government effectiveness, which reflects a perceived improvement in the quality of public services, the independence of the civil services from political influence, and the credibility of government policies, Moody’s said.
The global ratings agency said the UAE’s Worldwide Governance Indicators (WGI) point to a marked and continuous improvement in several key institutional areas over the past five years.
“The UAE’s current position marks a significant improvement from 2010, when the country ranked in the 70th percentile for this indicator. Furthermore, the UAE’s standing in terms of regulatory quality has improved even more dramatically, rising from the 50th percentile in 2010 to the 73rd percentile in 2014,” Moody’s Investors Service said in a research note.
“In the WGI definition, regulatory quality characterises the perceived ability of the government to formulate and implement sound policies and regulation promoting private sector development. The three WGI indicators that are directly captured in the UAE’s institutional strength score, namely government effectiveness, rule of law, and control of corruption, have also been trending upward since 2010, but at a slower pace, with the latter declining marginally in 2014,” said the report which also ranked the UAE in the highest category for per capita GDP in purchasing power parity terms at A$67,617.
The report noted that the UAE’s institutions come out exceptionally strong, with by far the highest perceived government effectiveness and regulatory quality in the regional context. “However, voice and accountability remain the weakest area for the UAE, with both Kuwait and Qatar ranking somewhat higher.”
The ratings agency has assessed the UAE’s external vulnerability as very low by taking into account the country’s persistent and high external surpluses weighted against moderate reliance on external capital inflows.
It observed the UAE’s current account is more stable than in its peers due to a smaller oil export component. In 2015, the UAE’s current account surplus shrank by 8.8 percentage points to 5.8 per cent of GDP, while Kuwait and Qatar’s surpluses declined by 26.9 and 16.0 percentage points, respectively, and are now at essentially the same level as the UAE.
Moody’s projected that the UAE’s external breakeven oil price to decline to $44 per barrel in 2016. “This relatively low sensitivity to oil prices reflects a high share of re-exports and non-hydrocarbon goods in the UAE’s export mix. Apart from being less correlated with commodity prices, these two export categories are likely to improve on higher demand from Iran and Iraq, two of the UAE’s main re-export markets.”