UAE is basking in the recent growth of its eonomy. Strong oil prices accompanied by high public spending has improved the economy by 3.3% in 2011. The Abu Dhabi-based Arab Monetary Fund (AMF) stated in its latest report that UAE?s real GDP expanded by about 3.2 per cent and is likely to pick up in the remaining months?projected to be 4-5% this year.
The current account surplus registered a 10.4% growth, while the balance of payment surplus registered 4.9% growth.
His Highness, Sheikh Mohammed Bin Rashid Al Maktoum, was upbeat about outlook of the UAE economy. Various global organisations and financial institutions that include the International Monetary Fund (IMF), the World Bank, Institute of International Finance (IIF), Economic Intelligence Unit, National Bank of Abu Dhabi, Saudi American Bank Group and National Bank of Kuwait have underscored optimistic projections about UAE economy.
The report, published in the AMF?s quarterly bulletin for January-March, showed strong oil prices would influence the UAE to record a fiscal surplus of 6.5 per cent of GDP this year.
UAE is the second largest Arab economy after Saudi Arabia. In the previous year, the current account surplus was $23.3 billion or around 7.7% of GDP and the balance of payment surplus stood at $7.3 billion; nearly 2.4 per cent of GDP.
In 2011, the non-oil sector is projected to recover by nearly 3.7% and accelerate by about 4.1% in 2012. The total volume of UAE non-oil trade in terms of weight in Feb. 2011 reached about 6.5 million tons, including 4.2 million tons of imports, 1.6 million tons of exports, and 683 thousand tons of re-exports.
UAE escaped a regional wave of protests against autocracy and economic hardship, which also boosted it as a safe haven. UAE continues to attract foreign investments, which will play a vital role in reenergizing trade and industry.
The debt insurance costs for Dubai fell sharply over the past weeks, while those for nearby unrest-hit Bahrain remain elevated. Dubai?s debts had hit performance of UAE economy last year, although a September deal on restructuring of nearly $25 billion debt improved the sentiments.
According to Reuters poll conducted in March, the rising trade flows and oil prices above $110 per barrel were expected to help lift UAE economic growth to 3.4% this year from an estimated 2.2% in 2010.
Rents are expected to keep down inflation, while the lending rate is reasonable and in line with the supply and demand. UAE inflation eased to a six-month low of 1.2 per cent in March, while loans and advances banking system rose 2.6 per cent in the same month.
All macroeconomic indicators show signs of a sustained vibrant growth, and economists believe that a combination of higher than expected oil price, a strong performance in trade and tourism sector, and expectations of faster regional growth will help accelerate the country?s growth to close to five per cent in 2011 and 2012. Economists also believe high government spending and improved consumer confidence would boost private consumption in the UAE. Increased spending on infrastructure projects, industry, ports and airports in the UAE will add further momentum of the UAE growth.
Source:Emirates24/7, tradearabia.com, Khaleej Times