UAE to remain 'most dynamic' economy

The UAE will remain the “most dynamic” economy in the Middle East and North Africa in 2011 as it benefits from large-scale capital inflows and an increase in energy prices, Eurasia Group said on Thursday.

“Dubai’s financial troubles may not be completely over, but the economic and political situation in the UAE has stabilised and will likely continue to improve in 2011,” Bloomberg said quoting New York-based Eurasia Group report,

“Investment in energy, petrochemicals, infrastructure, real estate, and education will drive growth.”

The International Monetary Fund said on October 6 that it expected the economy of the UAE, which holds about eight percent of the world’s oil reserves, to expand 3.2 per cent in 2011.

Crude has more than doubled from a four-year low in December 2008 and is trading at more than $88 a barrel on Thursday.

While Dubai may eventually have to sell assets to reduce its debt, “that probably will not happen in 2011,” Eurasia Group said. Dubai World, one of the emirate’s three main holding companies, said in October it secured approval from creditors to change the terms on $24.9bn of debt.

Abu Dhabi, the biggest emirate and owner of 90 percent of the UAE’s oil, will benefit from the creation of the Khalifa Industrial Zone, which will allow foreign investors 100 percent ownership, Eurasia Group said.

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