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Dubai economy seen growing 2.3 pct in 2010

Population rose by around 7 pct to 1.87 mln in Jan-Sept.

October 26, 2010 1:02 by

Dubai’s economy is expected to grow by 2.3 percent this year as the Gulf Arab emirate recovers from the global crisis, the head of its statistics office was quoted as saying on Tuesday.

The global credit crunch ended an oil and real-estate driven boom in the United Arab Emirates last year, while its own debt woes have slowed economic recovery in 2010.

“Dubai enjoys an infrastructure and legal framework that makes it attractive to foreign investment and that support the business environment,” Arif Obaid al-Muhairi, executive director at Dubai Statistics Centre, was quoted as saying on its website

“This helped strengthen the emirate’s economy in the face of the global financial crisis to produce positive growth during the first half of the year. It is expected to be 2.3 percent by the end of the year,” he said.

Muhairi’s forecast is more optimistic than that of the International Monetary Fund (IMF), which said on Sunday the emirate’s economy is likely to grow by a modest 0.5 percent this year, after shrinking 0.9 percent in 2009, due to a foreign trade pick-up.

Official 2009 gross domestic product data for Dubai, which is estimated to account for over 32 percent of the economy of the UAE, the world’s third largest oil exporter, are not available.

In February, when uncertainties around flagship Dubai World weighed on the market, the IMF saw Dubai’s GDP contracting by 1.3 percent this year. Dubai’s economy grew 5.7 percent in real terms in 2008.

Real-estate focused Gulf business hub Dubai accounts for around 80 percent of the UAE non-oil trade. Its exports jumped 46 percent in the second quarter compared to a year ago, while re-exports and imports also expanded at double-digit rates.

Concerns about Dubai’s liabilities, estimated at around $115 billion, have eased after state-owned firm Dubai World reached a deal last month to restructure almost $25 billion of debt.

But worries still persist about the debt pile owed by key companies such as Dubai Holding . Dubai and its state-linked firms face some $30 billion worth of debt to mature in 2011-2012.

Overall UAE credit growth remains anaemic due to bank exposure to Dubai debt, and is the main reason that leaves the OPEC country’s economy trailing its Gulf oil-exporting peers.

Muhairi also said Dubai’s population was on the rise, while the jobless rate in the city — known for ambitious projects such as artificial palm-shaped islands — stands at 0.8 percent.

“According to field surveys, the rate of population growth was around 7 percent over the first nine months of the year,” he said. “The number of residents is estimated at 1.87 million.”

(Reporting by Martin Dokoupil and Raissa Kasolowsky; editing by Stephen Nisbet)

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