UAE economy seen up by 2.4% in 2010

The UAE economy is projected to rebound by around 2.4 per cent in 2010 after shrinking by nearly one per cent in 2009, according to an official report.

The forecasts by the Abu Dhabi-based Arab Monetary Fund (AMF), a key Arab League establishment, are identical to those by the International Monetary Fund (IMF), which estimated real GDP growth in the UAE at 2.4 per cent this year. The IMF expected the GDP to pick up by nearly 3.2 per cent in 2011.

“The UAE’s real GDP is expected to expand by about 2.4 per cent this year after contracting by one per cent in 2009,” the AMF said.

Its estimates of the UAE’s GDP change in 2009 were far lower than those by the Washington-based IMF, which said the GDP shrank by 2.5 per cent. As for inflation, the AMF forecast the rate in the UAE to remain low at around two per cent, slightly higher than the 1.5 per cent rate in 2009 but far below the record annual inflation level of 12.3 per cent in 2008.

In press comments two months ago, Minister of Economy Sultan Al Mansouri projected a UAE real GDP growth at three per cent this year but said the estimates remain subject to change depending on oil prices and other factors.

 “We are very positive about the domestic economy in 2010…as you know challenges and problems resulting from the global financial crisis are all over the world not only the UAE,” Mansouri said.

 “All these problems have been identified and authorities around the world are taking action and measures to resolve these problems…in the UAE, if you look at its economy, it is relatively small compared with global economies but these problems here have been addressed in a very systematic and professional way…that’s why I am very optimistic about the economy, which we expect to grow roughly by between 2.5 and three per cent this year, aided by higher oil prides….but of course, all this depends on many factors through the year.”

The UAE has the largest Arab economy after Saudi Arabia and the IMF forecasts its nominal GDP to gain more than $15 billion in 2010 because of the increase in average crude prices by nearly $10 above their 2009 level.

From around $223.9 billion in 2009, the country’s nominal GDP is forecast to swell to nearly $239.6 billion in 2010, an increase of about $15.7 billion. The GDP will gain a further $15.5 billion to grow to nearly $255.1 billion in 2011, its highest ever level in current prices, the IMF report showed. At that level, the UAE will have the largest Arab economy this year after Saudi Arabia, whose nominal GDP is projected at nearly $434.4 billion in 2010, far higher than its level of about $376.3 billion in 2009.

The IMF gave no reason for its projection about a surge in the nominal GDP of the UAE and other Gulf states but its figures showed crude prices will likely be higher and their oil production is expected to rebound this year and next year.

In the UAE, crude output slumped to 2.3 million barrels per day in 2009 from nearly 2.6 million bpd in 2008. The IMF forecast production to climb to around 2.4 million bpd this year and 2.5 million bpd in 2010 apparently because of a recovery in the global economy and subsequently oil demand.