Arab Today, arab today uae economy to grow faster
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Arab Today, arab today
Arab Today, arab today

UAE economy to grow faster

Arab Today, arab today

Arab Today, arab today UAE economy to grow faster

Abu Dhabi - Arab Today

The UAE economy will grow at a pace faster than anticipated on higher than expected oil output and high government spending during the first three quarters of this year. The Institute of International Finance, or IIF, a global association of more than 470 financial institutions, on Monday raised its 2013 growth forecast for UAE to 4.7 per cent from 3.9 per cent previously. The non-hydrocarbon real GDP growth is also forecast to accelerate from 4.1 per cent in 2012 to 4.6 per cent in 2013, \"driven by higher government capital spending in Abu Dhabi and continued robust growth in trade, tourism and transportation in Abu Dhabi and Dubai”, the Washington-based IIF said in an updated forecast for the Middle East and North Africa. \"Despite our favourable near-term outlook, IIF has reservations about the renewed cycle of risk taking, as shown by the strong recovery in real estate and the sharp increase in equity market prices,” Dr Garbis Iradian, deputy director, Africa and the Middle East at IIF and principal author of the report, said. \"IIF welcomes the recent plan of the Central Bank of the UAE that includes limits on banks\' exposure to real estate and government-related entities. Furthering structural reforms, strengthening federal institutions and GREs corporate governance, and improving risk management practices are also important to reinforce the UAE\'s resilience to external shocks,” said Iradian. The UAE has benefited from its status as a safe haven since the Arab turmoil in 2011, he pointed out. Crude oil production rose by about five per cent in the first three quarters of this year. Corporate profitability has improved, equity markets in the UAE have risen on average by 60 per cent since the start of the year, and the PMI data point to sustained increases in output and new orders. \"Dubai\'s sovereign CDS (credit default swaps) spreads and bond yields continue to fall, indicating improved market confidence in the GREs and creditworthiness. Loan growth is poised to rise from 2.6 per cent in 2012 to 7.5 per cent in 2013,” Iradian told Khaleej Times. He said the real estate market has recovered significantly, although oversupply still hangs over segments of Dubai\'s housing market. \"Several mega projects that were postponed during the global financial crisis have recently been reinstated. Despite this favourable near-term economic outlook, markets could become concerned about the renewed cycle of exuberant risk-taking, as shown by the strong recovery in real estate and the sharp increase in equity market prices (80 per cent increase since the start of the year in Dubai),” he said. Welcoming the recent plan of the UAE Central Bank, which includes limits on banks\' exposure to real estate and GREs, Iradian said the resurgence in asset values could suggest that the lessons of the past experience may not have been fully absorbed, and that efforts should continue to focus on strengthening the balance sheets of financial institutions and the GREs. \"New projects need to be prioritised and designed in a way that limits risk-taking by the highly indebted GREs to avoid another boom-bust cycle. Further progress in structural reforms, the strengthening of federal institutions, further improvements in GREs\' corporate governance, and strengthened risk management practices are also important to reinforce the UAE\'s resilience to external shocks,” said Iradian. According to Dr George T. Abed, senior counsellor and director for Africa and the Middle East at IIF, the 16 countries in the Middle East covered by IIF\'s overview are expected to register overall GDP growth of 2.9 per cent in 2013, rising to 3.8 per cent in 2014. \"The averages, however, mask a sharp divergence as the 10 oil exporting countries show growth of 3.2 per cent and 3.9 per cent in 2013 and 2014, respectively, while the non-oil exporting countries struggle with 1.8 per cent growth in 2013 and 2.4 per cent in 2014,” said Abed. Abed noted that the respective fiscal positions of the two groups are more telling. While oil exporters achieve average surpluses of 6.3 per cent of GDP, oil importers face deficits of 10.3 per cent in 2013 and 2014. For the GCC countries, the average surplus is 10.8 per cent of GDP. Source: Khaleej Times

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