The document provides an economic summary for the United Arab Emirates (UAE) in June 2016. It analyzes 27 economic indicators across financial markets, global economy, sectoral activities, money market, and prices. Most indicators were positive in June, with the Economic Composite Indicator Watcher reaching 74.07%, signaling continued economic growth. Business and real estate activities increased, while inflation remained low. The document concludes global and domestic economic outlooks remain positive.

1. Page 1 of 5
Economic Composite Indicator Watcher (ECIW)
(Leading indicator for ECI)
According to the Central Bank of UAE; the Economic Composite Indicator (ECI) is a synthetic
indicator which measures the domestic economic activities i.e. financial markets, price trends,
sectorial activity, money market, and global economy. The indicator provides policy makers
with timely information about developments of economic activities; a leading indicator for
turning points. It is released quarterly by the Central Bank of UAE. What I present to you in this
report is the Economic Composite Indicator – (watcher); a monthly leading indicator for the
upcoming ECI.
JUNE 2016 (Reading)
Date Actual % Change Previous Ratings
FINANCIAL MARKETS
DFM General Index
% Change Monthly 30-Jun -0.08% -5.10% Negative
expected dividend yearend (Quarterly) Q4-15 AED35.61 -14.66 AED41.73 Negative
ADX General
% Change Monthly 30-Jun 5.82% -6.45% Positive
GLOBAL ECONOMY
IMF outlook forecast Global bi-annual 30-Jun positive neutral Positive
India 30-Jun positive positive Positive
USA 30-Jun positive neutral Positive
Germany 30-Jun positive neutral Positive
UK 30-Jun neutral neutral Neutral
China 30-Jun positive positive Positive
Japan 30-Jun positive neutral Positive
MONEY MARKET
Eibor 3 months UAE monthly 30-Jun 1.115% 1.02% Positive
domestic credit growth monthly (bln) 31-May AED1,414.4 0.01% AED1,401.0 Positive
Monetary base monthly 31-May 0.58% -1.51% Positive
currency issued 31-May 0.65% -1.42% Positive
banks' required reserve 31-May 1.29% 1.85% Positive
banks excess reserve 31-May -6.56% 10.68% Negative
certificates of deposit purchased by
banks (net of lending)
31-May 1.49% -7.36% Positive
M2 monthly (bln) 31-May AED1,186.4 -1.41% AED1,203.1 Positive

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Oil prices (Brent crude) monthly 30-Jun USD48.33 USD49.10 Negative
SECTORIAL ACTIVITIES
Business activities ( Dubai)
Licenses by type
Canceled Q1-16 829 791 Negative
Renewed Q1-16 36,296 30,657 Positive
New Q1-16 5,732 5,200 Positive
Building completion
statistics ( Abu Dhabi)
building completed ( new &
additions)
Q1-16 977 841 Positive
new buildings completed Q1-16 722 722 Neutral
residential buildings
completed
Q1-16 781 706 Positive
residential units completed Q1-16 1,551 1,283 Positive
PRICES
CPI 31-May 0.25% 0.38% Positive
CPI - Non-tradables
Transportation 30-May 4.08 3.42 Positive
Housing 30-May 0.02 0.08 Negative
medical care 30-May 0.25 -0.01 Negative
Communication 30-May -0.01 -0.07 Positive
restaurants and hotels 30-May -0.01 -0.04 Positive
Education 30-May 0.00 0.41 Positive
recreation & culture 30-May 0.00 -0.22 Positive
miscellaneous goods &
services
30-May 0.55 -0.01 Positive
CPI – Tradables % %
foods & soft drinks 30-May -0.96 0.32 Negative
beverages and tobacco 30-May 0.23 0.00 Positive
textiles, clothing and
footware
30-May -0.03 -0.03 Negative
furniture and households
goods
30-May 0.04 -0.21 Positive
Total PMI monthly (Markit
Group)
30-Jun 53.40 54.00 Positive
TOTAL INDICATOR USED 27

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ECI Watcher VS ECI 2015/ 2016
Total
Positives
Total Indicators
Used
ECI - Watcher
monthly
Score 2015/ 2016 ECI
Dec-2015 12 27 Dec-2015 46.15% Total ECI Q4 2.8
Jan-2016 8 27 Jan-2016 30.77%
Feb-2016 16 27 Feb-2016 59.26%
Mar-2016 17 27 Mar-2016 62.96% Total ECI Q1 3.0
Apr-2016 13 27 Apr-2016 48.15%
May-2016 15 27 May-2016 55.56%
Jun-2016 20 27 Jun-2016 74.07% Total ECI Q2 ?
The “Positives” (in bold-face) in the table
above represent those indicators presenting
positive outlook for healthy economic growth
given the current circumstances, while the
“negatives” are those militating against it. And
the neutrals, no change.
Having said so, the current reading for June
2016 of 74.07 per cent is above the 50.0 per
cent mark as required in order to affirm the
state of the economy as “positive”. A positive
reading above 50.0 per cent is considered
good for the economy. This current reading
marks the end of Q2 reading and was seen up
from the prior reading of 55.56 per cent
recorded in May 2016, therefore indicating a
possible uptrend in Q2 2016 ECI. The ECI
reading was 3.0 for Q1 2016; up from 2.8 seen
in Q4 2015. As a confirmation my ECI watcher
(ECIW) also gained; moving from 46.15 to
62.96 percent during December 2015 and
March 2016 respectively. See table above for
details.
However, given that the ECI is released at least
a month after the end of every quarter the Q2
2016 data will be available towards the end of
this month or early August. That is when the
trend reading comparison between ECI-
watcher (ECIW) and the ECI will be made. So
keep this FYI and future reference.
Economic Analysis and Overview
Financial Market Trends:
The Dubai financial market (DFMGI) lost 5.10
and 0.08 percent in May and June respectively;
while the Abu Dhabi General Index (ADX) lost
6.45 percent during May rebounded with a
gain of 5.82 percent in June. The hefty
increase in index value was aided by banks,
consumer staples, services and
telecommunication indexes. The global
markets also witnessed great recoveries since
the BREXIT scare that caused market crash
across the board. The Dow industrials and S&P
500 are currently at all-time highs; an
indication of bullish trend an optimism not
seen in recent time. You can be rest assured
the DFMGI and the ADX will not be left holding
the bag as global markets move in somewhat
tandem.
Going forward I expect further rally in both
indexes; for the DFM 3,600 and a breakout
from 4,600 for the ADX given the current
global economic growth expectation after
BREXIT. The UAE economy is also experiencing
a recovery from bottom of economic cycle.
The resulting capital gains from market rally
will further fuel the consumer spending and
greatly contribute to economic growth.

4. Page 4 of 5
Interest rate and Price Trends:
The consumer price index (CPI) an index of
basket of goods and services which measures
household consumption price changes
occurring within the economic system monthly
recorded a drop in June from previous month
to 0.25 percent from 0.38 percent (M-O-M).
This marks the end of three consecutive
monthly increases seen since February this
year despite increases of 4.08 percent in
transportation and 0.55 percent in
miscellaneous goods & services which did
more than others in contributing to the
current price level which I think should be at a
level somewhat higher than this to be
considered desirable level.
At a time like this when global recession has
impeded consumer spending thereby
contributing to stockpile in inventory; also
given that years of global competition led to
decreases in borrowing and lending rates
across continents which ultimately led to
inventory buildup over the years; it is only
imperative for prices to rise so as to
discourage borrowing and hence inventory
buildup.
The slowdown in rate of decreases seen in
restaurant & hotels cost also points to growth
in economic activities; it went from 0.04
percent decrease in April to 0.01 percent
decrease in May prices. This is an indication
people are eating out and traveling for
business and leisure as restaurants & hotels
stop given deep discounts finding it
unnecessary to do so. Usually when such items
pick up in momentum; it is always an
indication people are optimistic about future
income- “animal spirit”; this also explains why
food & drinks fell as people are no longer
cooking at home for the most part.
With increases in prices comes an increase in
rates which I consider good for the UAE
economy at this time given the tight margins
in interest rates and prices. Globally, investors
are constantly seeking positive increases in
real returns, the eibor rates increased in June
to 1.115 percent after two consecutive
monthly drops seen in May and April to 1.02
and 1.04 percent respectively. For several
months now countries like Switzerland and
Germany have been experiencing negative
interest rates. In other words, banks have
been a washed with cash with no borrower at
sight. This is another example of a peak in
inventory buildup. It is almost as if the
companies are waiting for sales to pickup so as
to offload inventory.
Business and Economic Activities:
Business activities in Dubai during Q1 was
encouraging as 36,296 business licenses was
renewed as against 30,657 renewed in Q4
2015; while new licenses issued was 5,732 as
against 5,200 same period under review. This
was dampened by the cancelation of 829
business licenses and increase of 38 over the
previous quarter in review.
The real estate and construction sector in Abu
Dhabi also contributed to recent gains seen in
ECI- Watcher as new buildings & additions
completed came in at 977 in Q1 a change of
136 from 841 during Q4 2015. The residential
component for Q1 saw homes completed
coming in at 781 new homes compared to 706
in Q4 2015; while residential units
(Apartments) completed Q1 was 1,551 versus
1,283 seen in Q4 2015. In furtherance to
these, is the behemoth construction project in
Dubai been undertaking by EMAAR Properties:
The Dubai Creek Harbour capable of impacting
the UAE economic growth far into the future.

5. Page 5 of 5
Money Market:
The monetary policy stance during June was
that of ease money as June monetary base
increased by 0.58 relative to a drop of 1.51
percent in preceding month. It is from the
base that the policy makers create new
money. Currency issued added 0.65 versus a
decrease of 1.42 percent seen in May.
Certificates of deposit purchased by banks net
of lending also increased by 1.49 percent as
against a reduction of 7.39 percent in May.
The certificate of deposit remains the largest
component of the base. On the contrary bank
excess reserve decreased by 6.56 relative to
10.68 percent observed in the preceding
month. This is a confirmation the banks are
fully loaned up; while bank required reserves
was 1.29 as against 1.85 percent seen in May;
this decrease is due to the ease money policy
in June. However, M2 decreased by 1.41
percent to AED1, 186.4 (billion) relative to
May figure of AED1, 203.1 (billion). The M2
comprise of checking deposit, currency in
circulation, Vault cash plus near money. It is
the monetary aggregate most commonly
watched by policy makers as it comprises high
powered money.
Global Outlook 2016:
Global economic outlook looks promising as
positive growth expectation is foreseeable
amongst major trading partners of UAE as
India the largest of these in terms of trade
remains the Worlds’ fastest growing economy;
while US, Germany, China and Japan has
positive outlook for 2016.
June 2016 PMI- UAE:
The Emirates NBD Purchasing Managers Index
which measures the performance of
companies in the non-oil private sector and
derived from 400 companies survey; including
services, manufacturing, construction, and
retail. The component indexes have the
following weights: New orders (30 percent),
Output (25 percent) Employment (20 percent),
Suppliers delivery Times (15 percent), and
stock of items purchased (10 percent) fell to
53.6 in June from 54.0 percent in May. The
April and March figures were 52.8 and 54.6
percent respectively. A reading above 50.0
percent indicates healthy economic growth;
while a reading below 50 indicates contrary.
Price : AED100 / Month
Sources:
Statistic Centre Abu Dhabi
Dubai Statistic Centre
Central Bank of UAE
Dubai Financial Market
Abu Dhabi Stock exchange
International Monetary Fund (IMF)
Markit Group
Trading Economics
Emaar Properties
Produced by: Collins Okonkwo +971-052-7608-263 email: Collins_1994@yahoo.com