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UAE poised to survive crisis despite slower GDP growth
posted on 02/03/2009
 The UAE is well positioned to survive the economic crisis even though growth in the country's real Gross Domestic Product is likely to be only a fraction of what it was
in 2008, the head of the Dubai
Chamber of Commerce and Industry said on Sunday.
"The country will continue to record surpluses, while inflation is expected to drop from 14 per cent in 2008 to eight to six per cent in 2009,β said Engineer Hamad Buamim, the chamber's Director-General.
He added that the country's fiscal surplus would support the government's planned investment spending.
The UAE's real GDP growth rate would ease to between two per cent to four per cent this year, he said. Real GDP grew at an estimated 7.2 per cent in 2008, 7.7 per cent in 2007, 9.4 per cent in 2006 and 8.2 per cent in 2005.
Buamim made his comments on Sunday at an economic forum in Dubai called "The Gulf Region in the Global Economic Crisis: Force for Stability,β which was hosted by Georgetown University in Washington, DC.
The chamber's top official added that that the UAE's total foreign currency debt stood at US$211 billion, with Dubai's share at 57 per cent. Buamim attributed this mounting debt to the reliance by public and private institutions on external sources of financing for their investment and projects, including those in infrastructure, services and real estate.
However, he noted that the UAE Government and Central Bank responded quickly, by making Dh120 billion in deposits and credit available to banks in need of liquidity. In addition to the cash injection, including Dh70 billion in long-term deposits in the banks and a Dh50 billion emergency funding facility, the UAE launched a dirham-dollar swap facility to provide dollars where needed.
Other measures included the US$20 billion Dubai Government bond programme and the Abu Dhabi Government's Dh16 billion recapitalisation of its banks.
Sheikh Nahyan bin Mubarak Al Nahyan, UAE Minister of Higher Education and Scientific Research, said the UAE was looking for opportunities in the current economic situation. These include "charting a future of economic diversification, reviewing our development and human resource policies and re-examining our national objective of dependence on foreign labour,β said the minister, the keynote speaker at the forum.
"In the UAE, we are determined
to seize these opportunities in order to promote long-term prosperity, to encourage business development
and to improve standards of
living,β he said.
Henry Azzam, Deutsche Bank's CEO in the Middle East and North Africa, agreed the UAE's growth would slow this year but argued that government support would ensure that the country did not slip into outright recession.
"The government and the Central Bank have responded swiftly and strongly to provide liquidity, and have the resources to do more if necessary,β Azzam said.
"They have put in place expansionary fiscal and monetary policy, and have been injecting equity into local banks and guaranteeing deposits.β β Khaleej Times
RELATED ARTICLES
Arab media sheds light on UAE economy - 04 December 2009
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UAE inflation at 1.9% in first 10 months of 2009 - 25 November 2009
Contribution of non-oil should be increased for long run economic growth, Mohammed Omar Abdullah - 24 November 2009
UAE economy could expand 5% in 2010 - 24 November 2009
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