Arab Today, arab today dubai to lead uae growth in 2013
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Dubai to lead UAE growth in 2013

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Arab Today, arab today Dubai to lead UAE growth in 2013

Dubai - Arabstoday

Dubai is firmly moving towards a full recovery and is expected to spearhead real growth in the UAE economy in 2013, according to a Western study. The UAE’s GDP, the second largest in the Arab world, surged by 4.7 per cent in 2011 after recording 3.2 per cent growth in 2010 and 3.7 per cent contraction in 2009, said the study by the Washington-based Institute for international Finance (IIF). IIF projected UAE GDP growth to slow down to 3.2 per cent in 2012 and 2013 due to slackening growth in the hydrocarbon sector. It expected Dubai, the region’s business hub, to lead growth with 4.2 per cent in 2013 while Abu Dhabi’s non-oil sector will swell by around four per cent. Abu Dhabi’s hydrocarbon sector will contribute 1.3 per cent to growth. The report showed Dubai’s GDP, the second largest in the UAE after Abu Dhabi, shrank by around four per cent in 2009 and 2.2 per cent in 2010 because of the 2008 global fiscal distress and the debt issue. But GDP rebounded into growth of 3.2 per cent in 2011 and is projected to remain positive at about 2.5 per cent in 2012, IIF said. The report attributed the UAE’s high growth in 2011 to what it described as a sizable increase in crude oil production and solid growth in Dubai’s core activities of trade, retail sales, and tourism, which have more than offset the continued retrenchment in the construction and real estate sectors. “We expect growth to moderate to 3.2 per cent in 2012. Average crude oil production in Abu Dhabi is expected to increase by 3.3 per cent in 2012, compared with an increase of nine per cent in 2011.” IIF, which groups major banks in the West, said continued higher oil prices and fiscal surpluses have encouraged Abu Dhabi’s Executive Council to press ahead with several of its large projects this year. This may ore than offset a possible weakening of private sector investment and result in non-hydrocarbon growth of 3.3 per cent in 2012, it said. Turning to finance, IIF said it expected UAE government expenditure to increase by nearly 14 per cent this year because of higher salaries and a projected sharp rise in spending on infrastructure in Abu Dhabi. “Nonetheless, under the assumption of an average oil price of nearly $114, the increase in hydrocarbon revenues will more than offset the rise in spending, leading to a fiscal surplus of 4.7 per cent of GDP in 2012, as compared with 4.4 per cent in 201,” the report said. It said higher hydrocarbon exports would also largely strengthen the UAE’s external position, with the current account surplus rising to around $51 billion in 2012, or 13.3 per cent of GDP. “This, combined with an assumed return of five per cent on investment, will lead to further growth in the SWFs’ balances to a total of $580 billion by end-2012.…the assets will further swell to $630 billion by end 2013.” According to IIF, progress in structural reforms in the UAE over the next few years, the strengthening of federal institutions, and the enhancement of transparency and governance could accelerate the pace of non-hydrocarbon growth to over four per cent in the medium term. “Dubai’s excellent infrastructure and its prime location as a global hub for trade and tourism should continue to underpin diversification and growth…. Abu Dhabi’s resources, its considerable investments in modern infrastructure, energy and services should help sustain solid growth for the UAE over the medium term,” it said.

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