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As world sinks, will UAE swim?
Economists are positive on the UAE economy, even as the IMF warns the world’s labour situation could threaten entire societies. Kipp takes a look.
September 14, 2010 4:34 by Sam Potter
Dubai may still have hurdles to overcome as it battles its huge debts, but the UAE as a whole is on firmer ground, according to the latest reports. Early this week the Economist Intelligence Unit (EIU), part of the London-based Economist Group, announced that higher oil prices are likely to boost the UAE economy to a record high of 1 trillion dirhams this year.
The growth will help secure the UAE as the Arab world’s second largest economy (after Saudi) and the second in terms of per GDP capita income.
GDP for 2009 was 913 billion dirhams, and that’s expected to jump to around 1 trillion this year, and 1.15 trillion in 2011. That would mean nominal growth of 9.3 percent and nearly 15 percent respectively. In 2009 the economy suffered a contraction of 11.9 percent.
The growth is indeed good news, but remains far off 2007 and 2008 levels. In those years nominal growth was 22 percent and 36 percent respectively.
In real terms, what does this mean? Growth this year of 2.6 percent, says the EIU. Last year saw a contraction of 2.7 percent. “Economic growth should pick up pace in 2011, although we expect only a modest increase in oil production owing to a slow recovery in demand. We forecast that real GDP will grow by 3.5 per cent in 2011,” EIU’s Middle East editor, David Butter, told Emirates 24-7.
And the good news gets better. Following on from the 2.6 percent prediction from EIU, Standard Chartered bank has announced that it expects “positive growth of 3 percent this year, despite uncertainties and risks such as weak credit growth for the country.”
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