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18559
Tue, 09/09/2008 - 13:22
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UAE economy to grow by more than 7% in 2008
Dubai, Sept 9, 2008 (WAM) - Strong crude oil prices and a surge in construction and other sectors will boost the UAE economy by at least seven per cent in real terms in 2008 but inflation is expected to worsen, an Arab League financial institution said yesterday Emirates Business reported.
The country's real gross domestic product (GDP) swelled by 7.4 per cent in 2007 and is projected to record similar growth this year, the Abu Dhabi-based Arab Monetary Fund (AMF) said in its quarterly report.
"Indications show that the UAE's economy will continue to record high growth rates this year as they are projected to be almost equivalent to the growth rate of 7.4 per cent recorded in 2007," the report said.
"This good performance will be a result of strong oil prices and the high growth in such sectors as construction, real estate, trade and foreign investment inflow."
The report gave no figures on GDP but in current prices, it was estimated by the UAE Ministry of Economy at around Dh729.3 billion in 2007 compared with Dh624.6bn in 2006, a nominal growth of 16.8 per cent.
The UAE economy has recorded high real and nominal growth over the past few years because of a surge in oil prices, massive public and private investments, a construction boom and high growth in most other sectors. High growth allowed the country to maintain its position as the second largest Arab economy after Saudi Arabia, while it also remained the second after Qatar in terms of per capita income, which exceeded Dh170,000 last year.
High public and private investments have been cited as among the key reasons for the accelerating inflation in the UAE and other Gulf oil producers along with a surge in rents and food prices, and the currency peg to the US dollar. From less than three per cent in 2000, inflation in the UAE jumped above six per cent in 2005, nearly 9.3 per cent in 2006 and 11.1 per cent in 2007.
"High economic growth in the UAE has been accompanied by a surge in consumer prices," the AMF said. "Official data showed inflation stood at around 11.1 per cent last year and is expected to remain high this year."
The report referred to UAE Government measures to deal with inflation, but noted that recurrent interest rate cuts by the Central Bank to match the US Fed over the past few months have led to higher liquidity.
Citing official figures, it said personal loans were as high as Dh5bn during the first quarter of this year, while money supply (M3) grew 8.4 per cent at the end of the first quarter compared with its level at the end of 2007. It recorded a growth of as high as 40 per cent compared with the first quarter of 2007.
"As capital inflow is expected to remain strong, M3 could jump to as high as Dh1 trillion at the end of 2008," the AMF said. According to the UAE Central Bank, M3 peaked at nearly Dh754.5bn at the end of March compared with around Dh696.2bn at the end of December.
The country's real gross domestic product (GDP) swelled by 7.4 per cent in 2007 and is projected to record similar growth this year, the Abu Dhabi-based Arab Monetary Fund (AMF) said in its quarterly report.
"Indications show that the UAE's economy will continue to record high growth rates this year as they are projected to be almost equivalent to the growth rate of 7.4 per cent recorded in 2007," the report said.
"This good performance will be a result of strong oil prices and the high growth in such sectors as construction, real estate, trade and foreign investment inflow."
The report gave no figures on GDP but in current prices, it was estimated by the UAE Ministry of Economy at around Dh729.3 billion in 2007 compared with Dh624.6bn in 2006, a nominal growth of 16.8 per cent.
The UAE economy has recorded high real and nominal growth over the past few years because of a surge in oil prices, massive public and private investments, a construction boom and high growth in most other sectors. High growth allowed the country to maintain its position as the second largest Arab economy after Saudi Arabia, while it also remained the second after Qatar in terms of per capita income, which exceeded Dh170,000 last year.
High public and private investments have been cited as among the key reasons for the accelerating inflation in the UAE and other Gulf oil producers along with a surge in rents and food prices, and the currency peg to the US dollar. From less than three per cent in 2000, inflation in the UAE jumped above six per cent in 2005, nearly 9.3 per cent in 2006 and 11.1 per cent in 2007.
"High economic growth in the UAE has been accompanied by a surge in consumer prices," the AMF said. "Official data showed inflation stood at around 11.1 per cent last year and is expected to remain high this year."
The report referred to UAE Government measures to deal with inflation, but noted that recurrent interest rate cuts by the Central Bank to match the US Fed over the past few months have led to higher liquidity.
Citing official figures, it said personal loans were as high as Dh5bn during the first quarter of this year, while money supply (M3) grew 8.4 per cent at the end of the first quarter compared with its level at the end of 2007. It recorded a growth of as high as 40 per cent compared with the first quarter of 2007.
"As capital inflow is expected to remain strong, M3 could jump to as high as Dh1 trillion at the end of 2008," the AMF said. According to the UAE Central Bank, M3 peaked at nearly Dh754.5bn at the end of March compared with around Dh696.2bn at the end of December.
