UAE food and drink sector remains promising

BUSINESS Monitor predicts favourable outlook for the UAE in 2013 and beyond. Their baseline scenario sees real GDP expanding by 3.2% and 3.8% in 2013 and 2014 respectively. Industry data in the UAE Food & Drink Report indicate:

?In 2013, Business Monitor expects total food consumption to increase by 5.3% in local currency terms. Over their five-year forecast period to 2017, they expect total food consumption to increase at a compound annual rate of 6.2%.

?Soft drinks volume sales are forecast to grow by 3.6% in 2013. To 2017, Business Monitor forecast compound annual growth of 3.3%.

?Mass grocery retail sales will increase by 8.4 % in 2013 in local currency terms. To 2017, mass grocery retail sales are forecast to grow at a compound annual rate of 11.2%.

Business Monitor believes that politically, any attack by Islamist militants would result in a fundamental reappraisal of the UAE’s, and the wider regions, risk profile. Any increased uptick in tension between the West and Iran could result in the deterioration in the UAE’s sovereign risk profile.

Looking at economic factors, with global growth slowing, downside risks to oil prices in 2013 are elevated, which could undermine the UAE’s already fragile macroeconomic recovery.