that every business is unique in a competitive world, since every business needs focus and accuracy to achieve the best results. Therefore, our organization is distinguished, among others, by its vision of each client as a unique business that should be fully supported in the management of its investments in light of continuous market fluctuations, so we would like to clarify some points.
First: The true meaning of the “market” must be clarified:
The market is the default place where demand and supply processes are applied, since it provides an interaction between sellers and buyers for providing services and selling goods in exchange for money.
The emergence of commercial thought and the increase of trade exchanges based on purchase and sale led to the transformation of the market towards a very basic foundation in the economic system, and thus production became dependent on consumers’ desires as well as the prices that are offered for the products, resulting in the development of markets, which, in turn, contributed to their current status. Consequently, the so-called marketing planning emerged, which is the means associated with defining the object of the market, based on which marketing policies and planning are developed in order to establish a philosophy for dealing with consumers.
Given the foregoing, we conclude that market is the outcome of purchase and sale and the policies adopted for market management, which means that market is a reaction to: (behavior of the consumer, supplier, and government of the state), where these three pillars impact the movement of the market.
First: What are the factors that result from the three pillars (consumer, supplier, and state) that can impact the market?
There are four main factors that can impact interaction within market. These factors can sometimes turn into trends and can result in short- or long-term fluctuations in the market. Understanding such factors can help us understand their market impacts and understand how markets around the world adapt to specific changes.
Factor 1: Governments that have very strong market acceptance can significantly affect any free market. The two main ways in which the government can influence the market are through the “monetary policy or fiscal policy”.
Monetary Policy: When the government and its central bank increase or reduce the interest rate in the State. This can either accelerate or slow the growth of the State, which has a direct impact on the market.
Fiscal Policy: The method with which the government uses its revenues and expenses. In other words, the funds the government gets or invests in its market, which affects market prices and unemployment.
Factor 2: The international transactions i.e. flow of funds among countries. The main activity that contributes to the flow of funds among countries is import and export. The more a country relies on imports, the weaker its currency and the weaker its economic situation. On the contrary, the greater the country’s exports, the more money it gets into its market and, thus, the more it can invest in its financial market.
Factor 3: Forecasts and speculations, i.e. how consumers, companies, and investors expect the future of the market and how they behave today as a result of their forecasts. The issues these groups base their forecasts on are trends in the market as well as historical events. This, however, has a relatively short-term effect on the market rather than the factors previously mentioned.
Factor 4: Supply and demand for products, services or, currencies is the last factor in our equation. It creates a price-pull dynamics, like when demand increases and supply becomes insufficient, and prices increase as a result. On the other hand, when supply increases over demand, prices fall. However, it must be noted that both supply, demand, and prices have a direct impact on each other, and on the market as well.
Although these are the main factors that can affect the market, they are not the only factors that can cause fluctuations or differences in the market. In addition, while all these key factors are ultimately distinct, they are closely related to each other
Explanation of the Above
It is clear from the above that the market is a reaction, not an action as some investors believe when they say phrases like “market is bad or not good”, because they believe that their sales are bad due to the bad market. However, this belief is not true at all since their sales might be bad because they are not fully-aware of how to deal with the market. In fact, it is natural that the movement of demand and supply is constantly changing with the increase in supply demand or increase of demand over supply as a result of the behavior of consumers and suppliers and the State policies.
For example: When an investor starts an activity (e.g. contracting) in a certain area with no competitors in the same field, demand will be more than supply for the investor, and with increasing competitors in the same field, the supply will be more than demand and thus the market gets downsized as a result of the increase of competitors. Here, the term “Market Planning” must come in. It means the development of special marketing policy to change the market movement for the benefit of the investor by decreasing prices or merging with another competing company in the same field in order to reduce competition in market.
We provide our clients with full support in determining the fiscal policy to be followed in dealing with the market by studying and analyzing market requirements in the current period.
Quarter Group is an integrated service institution that provides financial auditing and transaction clearance services as well as financial, administrative, marketing, and tax advice.
We also provide our clients with all full support in the management of their companies in terms of administrative and financial aspects, and we also provide marketing consultancy and development of plans for how to invest correctly in UAE supported by our financial experts in all fields.
We also offer tax consultancy through our tax agents and how to deal with VAT and development of the accounting system necessary for dealing with VAT without exposure to violations or tax penalties.
Furthermore, we provide our clients with financial and economic studies and reports on investment opportunities in the market so that they can have a better view of the market and consequently a better investment opportunity in it. Below, we review some of the reports that are issued to our clients – Financial Report on UAE Economy in 2019.
We offer you reasons why we expect the UAE economy to be the best in 2019
FIRST: The economic policy in the UAE and the UAE government vision in 2019:
Question 1: Is Dubai in a recession?
Quite simply, Dubai is not in a recession. Economic recession is when the economy does not grow year after another. If the economy grows less than the previous year, there is no growth in this case, but this is not called recession. Simply, what we have is a slowing growth, not a recession.
In addition, the economy achieved growth of 3.9% in 2015, 2.5% in 2017 and 2018, and increases every year until 2020 as expected to grow by 4-5%. It will be one of the fastest growing economies in worldwide.
First: Characteristics of the economic environment in UAE:
UAE is characterized by a stable investment, economic, and political environment capable of sustaining economic growth despite the global economic recessions and the declines in oil prices due to several reasons:
Strong Financial Reserves:
UAE has strong financial reserves and a strong banking sector that helps it provide a secure investment environment that is sufficient for the Government to be able to continue providing the necessary financing for all its projects, meeting its financial obligations, and spending over its public budget without financial constraints.
Sovereign Funds “SWFI”:
According to the rankings of the Sovereign Wealth Fund Institute “SWFI”, Abu Dhabi Investment Authority “ADIA” is one of the largest sovereign funds in the Middle East, and the fifth largest fund in the world with an estimated USD 792 billion.
A Promising Economic Environment:
According to the World Investment Report, UNCTAD, UAE is ranked 11th as a promising and stimulating investment environment for the following reasons:
- Flexible economic laws and easy of doing business.
- Stability of the AED against the USD and ease of conversion.
- No restrictions on the re-export of profits or capital.
- Advantages of free zones and specialized economic zones.
Continued Government Spending:
Government spending on infrastructure projects across UAE continues, including road and tunnel networks, federal buildings and other federal initiatives.
Economic Strategies for Economic Diversification:
UAE adopts economic strategies that stimulate economic diversification and have succeeded in increasing the contribution of non-oil sectors to the national economy, such as manufacturing, aviation, tourism, banking, trade, real estate, services, and alternative energy.
Free Zones:
- UAE has many free and economic zones that offer incentives and economic benefits such as:
- Tax exemption for companies and import and export fees.
- Full ownership of foreigners without the need for a citizen sponsor.
- 100% recovery of profits.
- There are about 45 free zones in the UAE. According to a report on the Gulf News website, the free zones in UAE contributed with 33% of its non-oil trade.
Second: The Government’s Economic Vision in 2019:
What is planned in 2019 is the large expenditure of economic and housing growth of the State, benefits of hosting the Expo 2020, continued development of infrastructure, and upgrading the level of well-being and happiness of citizens and residents according to the State’s 2021 Vision, in addition to increasing the public expenditure budget for the fiscal year 2019 by 60.4% compared to 2010 expenditures of 35.40 billion, and 50.6% compared to 2009 expenditures of 37.7 billion.
Mr. Abdul-Baset Al-Janahi, CEO of Mohammed Bin Rashid Establishment for SME Development (Dubai SME) said:
Mr. Sami Al Qamzi, Director General of Dubai Department of Economic Development, said:
Monica Malik, an economist at Abu Dhabi Commercial Bank “ADCB”, wrote:
Government 2019 Vision
The Government announced AED 50 billion economic package to boost Abu Dhabi’s growth, stimulate tourism, and create new jobs. The Government of Dubai announced that it has a set of economic initiatives that include attracting more foreign investments, and that it plans to increase the number of visitors to the UAE. In addition, the Government of Dubai has promised 100% foreign ownership of some UAE-based companies, granting long-term residency visas of up to 10 years for foreign investors and some professionals. This could make foreign investment in Dubai more attractive. Moreover, helping foreigners plan a long-term stay in UAE encouraged them to buy homes, which boated the real estate field as well.
Economic Reports on the UAE Economy:
A report by SNEAR on economic growth in the UAE in 2019
The report expected real GDP to grow to 2.8% and 3.3% in 2019, and Dubai is expected to witness further growth as the pace of construction accelerates before hosting Expo 2020.
The report also said that the construction opportunities related to hosting the event are continuing to spread and would also encourage investment in tourism infrastructure.
Reports from the International Monetary Fund (IMF):
The report said that it is expected that UAE economy will grow by 4% in 2019 due to the following reasons:
- Expectations of real GDP growth in the GCC countries as expected by IMF.
- Economic recovery due to the implementation of investment projects necessary for the infrastructure before Expo 2020.
The expectation for UAE tourism industry is “very positive” while the UAE Federal Government is expected to increase spending by 5.6% yearly, which is expected to grow UAE economy this year and in 2019, after 2017 which was difficult given that growth slowed down by 1.5%.
Oil revenues are expected to slow as growth in non-GCC oil exporters slows to 0.3% in 2018 from 3% in the previous year, and slightly moves up to 0.9% in 2019. This reflects, to a large extent, the expected impact of re-imposition of US sanctions on Iran, which is likely to cut Iranian oil production and exports significantly over the next two years at least.
A recent report by the Economist Unit, published in Al- Bayan Newspaper:
The report showed promising indicators for UAE economy until 2022, stressing that the improvement in oil prices led to the support of economic activity in UAE. The report added that in light of expectations, the average price of a barrel is to reach USD 73.3 during the period from 2018 to 2022, which is much higher than USD 48.20 in the period between 2015 and 2016, and the oil revenues will continue to increase during the forecasts.
VAT, applied in January 2018, will also give a strong boost to tax revenues during 2018 to 2022, providing liquidity for spending on State infrastructure projects and introducing liquidity needed to increase market movement.
A report by the Cluttons Property Consultants:
The report said that the housing units prices are expected to fall by 3% and 5% by the end of 2018. On the other hand, the rental rates are expected to go through a similar decline. The report said that the impact of this decline will likely diminish until it completely fades with Expo 2020.
For commercial units, unlike residential units, the administrative and commercial units were able to maintain their balance and strength better during the times experienced by the real estate sector. This is due, in large, to the UAE’s focus on diversifying its economic activities in the recent period, attracting many investments and different industries.
On the other hand, there is a problem that the commercial sector may face with the approach of Expo 2020, as the expo will create a significant increase in the demand for commercial units that investors and companies participating in the expo will need. This increase will, in turn, require a similar increase in the administrative units offered for sale or rent.
According to a study by WITAS on the UAE and the real estate market:
The report said that it is expected that UAE real estate market will recover due to several factors and reasons, namely: UAE economy dependence on non-oil sectors and its focus on increasing investments in the sectors of real estate, renewable energy, and tourism, as it has made Dubai the most attractive places for tourists and investments in the world. It is clear to us that most economic analysts in the UAE expect a rise and economic growth in 2019 ranging between 2.5% to 4.5% due to the impact of high oil prices and the government stimulus package.
What we witness is an economic recovery expected in 2019 but there is likely to be a liquidity problem for companies at the beginning of 2019, to be faded by the end of the first quarter of 2019.
What we want to clarify is that it is natural that the market goes up and down as a result of changing behavior of suppliers and consumers, as there is no market that is permanently stable. Thus, the investor or company must have a financial and marketing policy to counter market fluctuations, which is what we offer our customers.
For any investor willing to enter into a specific investment sector in UAE, we provide all the information necessary to achieve the highest revenues in the least time through communication with suppliers or customers of the targeted investment sector. We have an extensive database for all companies and investors in all fields in UAE.
Our clients are in all investment activities, for example, but not limited to, real estate, contracting, gold, jewelry, restaurants, tourism, and other fields, which helps us in studying all the activities of the market and linking the sectors of investment and suppliers.
We, Mutabaa & Quarter Group, provide financial and investment solutions to our customers as well as the financial plans for deal ingwith the market and financial problems.
For more support on how to invest, deal with the market, and solve financial and tax problems, please contact us at: