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UAE economy shrinks, but how far?

UAE economy shrinks, but how far?

While officials say that the country will see economic recovery later this year, we ask how hard it has really been hit in 2009.

August 31, 2009 2:35 by

The UAE’s economy will be back on track by the fourth quarter of 2009, according to Sultan Al Mansouri, the UAE Minister of Economy.  “The UAE has emerged from the most difficult phase of the crisis with minimal losses,” he said.

There were several positive indicators for growth, he said, including the increase in UAE consumer confidence over the last quarter, and the slowing inflation in the first half of the year, which fell to 3.4 percent – down from 11 percent in 2008.

His statement follows that of the UAE central bank governor, Sultan Nasser Al Suweidi, who earlier this month told Arabic daily Al Ittihad that the country will see economic growth next year.

Al Suweidi said the UAE’s economy was solid and rising oil prices “will support expected economic growth next year.” However, he also conceded that weak oil prices would contribute to a contraction in the UAE economy in 2009. He said he expected oil prices to decline 30 percent overall in 2009, with the average price of a barrel of oil finishing between $60 and $63 for the year.

“It is natural for UAE gross domestic product to decline in view of these factors,” he said.

Although analysts and experts agree that there will be a contraction in the UAE’s economy, there have been numerous different estimates of how much it will actually contract.

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