Arab Today, arab today uae economy grew 49 on high oil prices
Last Updated : GMT 14:46:26
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UAE economy grew 4.9% on high oil prices

Arab Today, arab today

Arab Today, arab today UAE economy grew 4.9% on high oil prices

Abu Dhabi - Arabstoday

The UAE\'s GDP is estimated to have grown 4.9 per cent last year, said the latest report by the International Monetary Fund (IMF), adding that the UAE economy continues to recover from the fallout of the global downturn. \"The recovery of the economy is continuing despite the uncertain global economic environment. High oil prices and increased production, strong growth in Asia, and the UAE\'s perceived safe haven status in the context of the regional turmoil contributed to an estimated real GDP growth of 4.9 per cent in 2011,\" IMF said in its latest Article IV consultation with the UAE. \"Despite the continued weakness of the construction and real estate sectors in the wake of the 2009 crisis, real non-hydrocarbon growth picked up to an estimated 2.7 per cent last year, supported by trade, logistics, and tourism.\" For 2012, the IMF projects oil production to be flat, whereas non-oil growth is expected to strengthen further to 3.5 per cent.\"Inflation remained low at 0.9 per cent in 2011, mainly due to a continuing decline in housing rents, and price pressures are expected to remain subdued this year,\" it said. Matthew Green, head of Research and Consultancy, UAE at CB Richard Ellis, said: \"It is hoped that the positive economic growth forecast for 2012 will provide a stimulus for an improvement in the overall business environment, which could have a knock-on impact for the commercial real estate sector in particular. However, with new stock entering the market, lease rates are likely to remain broadly unchanged, with current rents below 2005 levels.\"Debt restructuring of some government-related entities (GRE), with debt estimated at $30 billion (Dh110.19 billion) maturing this year, remains a challenge, the IMF said. \"GRE indebtedness, refinancing needs and reliance on foreign funding remain high, with about $30 billion GRE debt maturing this year and significant amount of debt falling due in 2014-15,\" the IMF said. The IMF noted the progress made in restructuring and managing the debt of GREs, but stressed the need for further efforts to mitigate the fiscal risks posed by these entities. \"The GREs are still faced with high refinancing needs and are reliant on foreign funding,\" it said.In this context, the IMF encouraged further deleveraging and strengthening of impaired GRE balance sheets, increased transparency, and improvements in corporate governance at GREs. Despite the accommodative monetary stance under the peg to the US dollar, lending to the private sector has remained sluggish as excess capacity in the real estate sector and the debt overhang still limit lending opportunities, it said. The banking sector has remained well-capitalised and profitable, despite a continued rise in non-performing loans and higher provisioning. The IMF welcomed the continued economic recovery and favourable near?term outlook, but noted \"downside risks from the uncertain global environment and regional geopolitical tensions\". Going forward, the IMF encouraged UAE authorities to continue their efforts to sustain growth and diversify the economy, while maintaining macroeconomic and financial stability. The IMF regarded the fiscal stance as appropriately focused on a gradual consolidation to unwind the large fiscal stimulus undertaken in response to the 2009 downturn without undermining the economic recovery. \"They [IMF directors] particularly welcomed the consolidation plans in Dubai, which will help improve the emirate\'s debt sustainability in the face of contingent liabilities related to government?related entities (GRE) and the still weak real estate market,\" it said. Noting the recent federal salary hike and planned increases in development spending in Abu Dhabi, the IMF emphasised the importance of managing the composition of public expenditure carefully. It commended authorities\' efforts to strengthen the coordination of fiscal policies between the federal and emirate governments.

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