Saturday, 29 May 2010
The economy of the United Arab Emirates is expected to grow 3.2% this year due to an anticipated pickup in global oil demand, the National Bureau of Statistics said Saturday.
The economy expanded by 1.3% in 2009, a year in which the impact of the global financial crisis "emerged clearly", the report said.
"Despite the global financial crisis, and the accompanying drawback in economic activity and demand for workforce in various projects, expatriates continued coming to the country and searching for job opportunities across the emirates," the statistics bureau said in the report.
The U.A.E.'s population grew to 8.2 million in 2009, from 8.07 million in 2008, it said. At the end of 2009, about a quarter of the population was under the age of 15, with unemployment running at 4.2% across the emirates.
Minister of economy Sultan Al Mansouri said an oil price of $85 per barrel would support an economic growth forecast of 3.2% for this year, while he also remained "optimistic" that the country's economy was recovering from the global slowdown.
"The range [of economic growth] I wish to see is between 2% and 2.5%," which can be supported by an oil price of $75 a barrel, Al Mansouri said.
The National Bureau of Statistics, in a report which also provided an overview of the country's economic performance last year, said it expects oil demand to increase near the end of 2010, which will help absorb excess supply and maintain prices between $75 and $85 a barrel.
Light, sweet crude for July delivery settled 58 cents or 0.8% lower at $73.97 a barrel on the New York Mercantile Exchange Friday.
"I feel very comfortable with the figure of $80," Al Mansouri said. "Eventually, it should settle around $80 to $85, that's what I see."
The report said the U.A.E.'s economic fortunes remain contingent on oil prices and the ability to diversify its economic base, specifically by developing conversation industries and the non-oil sector. The oil sector contributed 29.4% to gross domestic product in the U.A.E. last year, while efforts continued to be made to boost the non-oil sector.
"The economy began to diversify into service sectors, most notably into trade, logistics, tourism, financial services, and high-value manufacturing," the report said.
Al Mansouri said he hopes to increase the GDP contribution of manufacturing and industry to between 20% and 25% over the next five to ten years. The sector's share of GDP stood at 16.2% in 2009.
The U.A.E. also plans to increase oil production to meet growing demand from Asia, which is seen expanding by 4% in 2010 and 2011, according to the report.
Meanwhile, inflation in the country is forecast to slow to 1.1% by the end of 2010, compared with 1.6% in 2009. It is expected to rise again to between 2% and 2.5% in 2011, as the global economy recovers.
Saturday's report comes just days after the International Monetary Fund said it may revise up its growth forecast for the United Arab Emirates amid expectations that a settlement to Dubai World's $23.5 billion debt restructuring will boost the second-largest Arab economy.
According to the fund, the U.A.E.'s economy will grow 1.3% this year, after shrinking 0.7% in 2009 as the global financial crisis hit oil prices, the country's main source of foreign currency income.
Al Mansouri said the IMF figures are "not necessarily as accurate" as the country's own. "We would recommend that you take our figures," he said.
On debt restructuring at Dubai World, Al Mansouri said: "We were hoping, in a way, that this issue would be solved by the first quarter of this year. Now it's on the way."
The statistics bureau report said "the decline in Dubai can be described as a special case," mostly due to financial problems at Dubai World and a struggling real-estate sector.
A mismatch in Dubai's development plan, launched in 2005, between short-term debt obligations and projects planned for the long-term were only made evident by the onset of a global financial crisis, the report said.
"The imbalance is attributed to the debt repayment periods, and the global financial crisis revealed these dangers and the reality of the situation" in Dubai, according to the report.
Al Mansouri said Saturday that a decision to delay debt payments at private conglomerate Dubai Holding "is a normal decision", and that the federal government wasn't involved in talks with, or a restructuring process at the group.
"I do believe they will meet their requirements," Al Mansouri said. Asked if Dubai Holding may require a large scale restructuring like Dubai World, he said: "I don't expect that."