Economy update: growth coming, changes needed, stocks volatile. We just saved you reading the article you know.
March 7, 2011 3:45 by Samuel Potter
The UAE is going to grow – hooray! Kipp wishes we could stand it up next to the kitchen wall and put a little mark on the wall above its head to measure its progress. Unfortunately our kitchen isn’t big enough, and also we aren’t talking about physical growth, obviously, but economic growth. So we’ll have to do without the kitchen wall and make do with the numbers other people give us. The latest come from the Saudi American Bank Group, which enjoys the terrific acronym Samba. Samba says that the economy can expect growth of 3.3 percent this year. No, it isn’t stellar, even if Emirates 24-7 calls the 3.3 percent figure rebounding ‘sharply’. But it is solid, and never forget that stellar growth is partly what got us into such a mess in the first place.
Last year’s growth was 1.5 percent, says Samba, but higher hydrocarbon earnings and increased trade and tourism will provide the boost. “Overall, we do not feel that developments in Mena will materially affect the UAE economy, which looks set to continue its recovery. In fact the spike in oil prices resulting from the political turmoil will help generate additional revenues which can be used to support growth,” it said.
“This we project will rise to around 3.3 per cent this year… We also do not expect any significant political pressure, reflecting the UAE’s more benign economic circumstance—including a relatively wealthy national population and contained inflationary pressures.”
At the risk of becoming a quote driven article, we’ll throw in one more from Samba, because we think it’s interesting and worth you seeing: “Headwinds will still come from the weak real estate sector, debt concerns and relatively tight domestic credit conditions. But these should be countered by further growth in the still dominant hydrocarbons sector (37 per cent of GDP), and strong oil revenues which will boost external assets and confidence.”
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