Summary: Context. Sustained low oil prices have led to a weakening of fiscal and external positions, tightening of monetary and financial conditions, and somewhat softer economic sentiment. Substantial fiscal consolidation was achieved in 2015, but it has weighed on non-oil growth and banks’ asset quality. Outlook and risks. Non-oil growth is expected to slow further in 2016, before improving over the medium term as oil prices recover and investment picks up in the run-up to the Expo2020. Macro-financial risks have increased, though the UAE’s large buffers and safe-haven status have helped to limit negative inward spillovers.

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