Mubasher: Sharjah's economy has slowed, with nominal GDP growth likely to stand at around 4% in 2017 compared to 6% on average during the period from 2010 to 2015, according to Moody's Investors Service.
The emirate’s debt burden and debt affordability are still low as compared with peers, although the economic slowdown pressures fiscal metrics.
Sharjah's debt rose with the issuance of a $500 million sukuk in January 2016 and $750 million sukuk in September 2014. The recent debt increase reflected capital expenditure and fiscal loosening to address economic slowdown resulted from the decline of oil prices.
"Sharjah has diversified its sources of funding. Debt denominated in US dollars accounts for roughly half of Sharjah's outstanding debt. International investors held 62% of the government's debt and the share will likely increase after taking into account the 2016 issuance," says Mathias Angonin, an Analyst at Moody's.
Sharjah’s inflation volatility is slightly lower than the UAE’s because of the smaller reliance on volatile foreign capital flows and more extensive foreign ownership controls.
“Similar to the UAE, inflation in Sharjah has been subdued since mid-2015 and has fallen steeply since the start of 2016, increasing by only 0.2% year-on-year in August 2016,” the rating agency added.
