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101095
Tue, 01/19/2010 - 14:50
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https://oananews.org//node/101095
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UAE economy set for 2.5% growth
Dubai, January 19, 2010 (WAM)- The UAE's gross domestic product (GDP) in real terms will grow 2.5 per cent this year, according to a report released yesterday by Shuaa Capital, a regional investment bank, Gulf News reported.
Speaking at a press conference, Mahdi Mattar, head of research and chief economist at Shuaa Capital and the author of the report, said that the growth will be led by Abu Dhabi as it benefits from a recovery in oil prices and production.
Strong growth in the non-hydrocarbon sector supported by government investment and spending will also help, he said.
In the report, UAE Vision 2010, Abu Dhabi's year-on-year GDP contracted 2.7 per cent in 2009 while Dubai's GDP contracted by 5 per cent.
Mattar said that Abu Dhabi was affected by a decrease in oil production, while Dubai's economy experienced real estate sector difficulties.
The UAE economy saw an overall contraction of 3.5 per cent in 2009, according to the report.
This year, GDP growth in Abu Dhabi is forecast at 4.1 per cent, while Dubai will see a slight contraction of 0.4 per cent. Mattar said. "The key construction and real estate sector continues to be a drag on growth in the emirate," he said.
The real estate sector is unlikely to experience a recovery until mid-2011, Mattar added. Studying the major listed companies in the UAE, the report said that corporate earnings in 2010 would see an aggregate growth of 17 per cent. This growth comes after an estimated earnings contraction of up to 20 per cent in 2009.
"Slower balance sheet growth in the banking sector, as well as deterioration in the asset quality, resulted in higher provisioning and a decrease in earnings by about 15 per cent in 2009," Mattar said.
Major UAE companies expected to "set the pace for the next rally" will be Aldar, Arabtec, National Bank of Abu Dhabi, Union National Bank, First Gulf Bank and Air Arabia.
Meanwhile, the report said that Abu Dhabi banks will witness double digit growth and Dubai banks will suffer either from a continued decrease in earnings or a relatively flattish forecast.
The report forecast that customer deposits will grow by eight per cent in 2010, leading to Dh84 billion net liquidity addition for the year. However, "this will be matched by a slower six per cent growth in lending as we expect banks to remain selective in their lending policies," Mattar said.
Essentially, banks' net earnings were expected to fall by 15 per cent in 2009 and recover by 8-10 per cent in 2010.
"Support is necessary from the federal government and central bank, who… [should be] ready to pump liquidity is needed," Mattar said.
Despite the Dubai World restructuring, there is an appetite for primary issuance in the region and especially in the UAE because of valuations.
"The market is extremely cheap compared to Qatar, Saudi Arabia and even [other] emerging markets," Mattar said. "We expect 2010 will see the resurrection of IPOs [initial public offerings] in the country."
Mattar said that markets would see some stability after an agreement on Dubai World's debts is reached. –
Speaking at a press conference, Mahdi Mattar, head of research and chief economist at Shuaa Capital and the author of the report, said that the growth will be led by Abu Dhabi as it benefits from a recovery in oil prices and production.
Strong growth in the non-hydrocarbon sector supported by government investment and spending will also help, he said.
In the report, UAE Vision 2010, Abu Dhabi's year-on-year GDP contracted 2.7 per cent in 2009 while Dubai's GDP contracted by 5 per cent.
Mattar said that Abu Dhabi was affected by a decrease in oil production, while Dubai's economy experienced real estate sector difficulties.
The UAE economy saw an overall contraction of 3.5 per cent in 2009, according to the report.
This year, GDP growth in Abu Dhabi is forecast at 4.1 per cent, while Dubai will see a slight contraction of 0.4 per cent. Mattar said. "The key construction and real estate sector continues to be a drag on growth in the emirate," he said.
The real estate sector is unlikely to experience a recovery until mid-2011, Mattar added. Studying the major listed companies in the UAE, the report said that corporate earnings in 2010 would see an aggregate growth of 17 per cent. This growth comes after an estimated earnings contraction of up to 20 per cent in 2009.
"Slower balance sheet growth in the banking sector, as well as deterioration in the asset quality, resulted in higher provisioning and a decrease in earnings by about 15 per cent in 2009," Mattar said.
Major UAE companies expected to "set the pace for the next rally" will be Aldar, Arabtec, National Bank of Abu Dhabi, Union National Bank, First Gulf Bank and Air Arabia.
Meanwhile, the report said that Abu Dhabi banks will witness double digit growth and Dubai banks will suffer either from a continued decrease in earnings or a relatively flattish forecast.
The report forecast that customer deposits will grow by eight per cent in 2010, leading to Dh84 billion net liquidity addition for the year. However, "this will be matched by a slower six per cent growth in lending as we expect banks to remain selective in their lending policies," Mattar said.
Essentially, banks' net earnings were expected to fall by 15 per cent in 2009 and recover by 8-10 per cent in 2010.
"Support is necessary from the federal government and central bank, who… [should be] ready to pump liquidity is needed," Mattar said.
Despite the Dubai World restructuring, there is an appetite for primary issuance in the region and especially in the UAE because of valuations.
"The market is extremely cheap compared to Qatar, Saudi Arabia and even [other] emerging markets," Mattar said. "We expect 2010 will see the resurrection of IPOs [initial public offerings] in the country."
Mattar said that markets would see some stability after an agreement on Dubai World's debts is reached. –
