According to a report released by the Dubai Economic Council, Dubai’s GDP is set to grow 4.1% in the first quarter this year. The Dubai Economic Outlook 2011 suggested GDP growth is likely to suffer later during the year due to economic slowdown in the eurozone, China, Japan, India and other leading economies. The report added that Dubai’s fiscal deficit will continue to decline in 2012. “There are a lot of internal and external challenges in front of Dubai which should be overcome to enhance its role as a key player not only at a regional level but globally,” Hani Al Hamli, secretary general of the Dubai Economic Council, said in a statement.
Meanwhile, UAE Central Bank Governor Sultan bin Nasser Al Suwaidi said inflation rate in the country will hover around 2% this year. ?The sources of inflation in the UAE are under control. Real estate prices and rents are stable, so there?s no domestic reason for it to rise,” the country’s top economist said in Muscat, Oman. According to the National Bureau of Statistics, overall annual consumer price inflation was 0.2% in 2011. An IMF assessment made in May 2011 suggested inflation is expected to remain low as rents are declining in the UAE.
Al Futtain Group and HC Securities & Investment have announced they are shutting down Al Futtaim HC Securities brokerage in Dubai after suffering in a very difficult environment for the past three years. “The declining trading volumes over the last four years, makes it impossible for us to predict when the UAE financial market will recover specially in light of the existing economic conditions in the world and the Middle East,” Hussein Choucri, chairman and managing director, said in a statement. After enjoying highs of business in 2008 and posting figures of AED2.2 billion ($600 million), the brokerage’s average daily trading slumped to AED226m ($61.5 million) in 2011.
Ministry of Finance officials from both the UAE and Oman met in Abu Dhabi to discuss ways on improving trade relations between the two states. “During the meeting, participants shared suggestions for improving trade between both countries, in addition to discussing the most important challenges present in customs outlets. Attendees agreed on asking mangers of respective outlets to host regular meetings to address barriers to trade. They also discussed the possibility of establishing an electronic link between UAE?s Federal Customs Authority and Oman Customs to ensure smooth exchange of information and figures,” Younis Haji Al Khouri, UAE’s undersecretary of Ministry of Finance, said in a statement after the meeting. Oman is UAE’s third biggest commercial trade partner after Saudi Arabia and Kuwait.
Oil-rich emirate of Abu Dhabi has announced the revival of Louvre and Guggenheim museums after reviewing their viability, a statement released by the Executive Council read. Plans of further investment in housing, health and education were also approved by the decision making body. The projects include around 20,000 homes for UAE citizens, 24 schools, 14 hospitals, six treatment centres, a state-of-the-art clinic and a 700,000 sq m extension of the airport to be completed by the end of 2016, and transportation projects that include metro and tram systems. Other plans also include the construction of two major roads and industrial zones for petrochemical products, food and auto manufacturing.
An influential Saudi prince has demanded the IMF to give Gulf states a bigger say in the global economic order as a recognition of its billions of dollars in financial aid to troubled eurozone economies. “What we can be certain of is that large developing nations will not agree to provide additional funds without a greater say in the IMF’s affairs, and this applies to all global economic governance organisations,” Prince Turki Al Faisal told the Global Competitiveness Forum in Riyadh on Monday. Last week a group of European central bank governors visited the Gulf region on a fund raising mission. Mario Draghi, the European Central Bank president, admitted the growing presence of GCC states in the global economy but Prince Turki insisted that bigger presence may also need to be given a bigger voice.
Concerns about Iran’s tit-for-tat measures against the latest EU oil embargo sparked concerns in global oil markets, triggering price rises of up to $100 a barrel in New York. Iran has threatened to close the Strait of Hormuz which is a transit route for about 17 million barrels of oil a day and facilitates the passage of world’s 20% oil supplies pumped out by countries like the United Arab Emirates, Saudi Arabia, Kuwait, Iraq. Qatar also uses the strategic waterway to export liquefied natural gas to markets around the world. However, David Lennox, an analyst at Fat Prophets in Sydney, said: ?You would have thought with the embargo coming out of the euro zone that the oil price would have been somewhere around US$115 but it hasn?t happened.?
Meanwhile, Iranian rial plunged to new lows as the EU announced its sanctions on Israel’s arch enemy’s oil exports. According to Mesghal, a financial website, the price of greenback rose 7% to 20,500 rials, up 15% from last week. The prices are 50% higher than they were a month ago. The black market dollar price was 80% more than the central bank’s official ‘reference rate’ of 11,300 rials. Western media reports said Iranians are flocking to seek hard currency through touts rather than official exchange offices.
(By Moign Khawaja – Editor: Arabian Gazette)