UAE economy grew 1.4pc in 2010

Monday, 16 May 2011 01:23 - - {{hitsCtrl.values.hits}}

Reuters - The United Arab Emirates’ economy grew 1.4 per cent in real terms in 2010 after shrinking 1.6 per cent in 2009, its statistics office said, although a struggling construction sector may continue to hamper growth.

Global financial turmoil in 2008 saw projects worth billions shelved in Dubai, a trade hub known for artificial palm-shaped islands and the world’s tallest tower, while oil output also fell as crude prices plunged, impacting overall growth.

The 1.6 per cent decline in gross domestic product (GDP) in 2009 was the Opec member’s first contraction since 1988.

In nominal terms, GDP reached Dh1,093 billion ($297.6 billion) in 2010 compared to Dh992.8 billion in the previous year, the data also showed.

The statistics office said in the statement that higher oil prices were a key factor driving the emirates’ economy out of the global financial crisis, but analysts also pointed to a broader recovery.

‘The service sector, including tourism, the hospitality business, and also exports and re-exports and industrial growth were the key drivers out of the contraction,’ said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

The National Bureau of Statistics also said it changed its base year for economic indicators to 2007 from the previous benchmark of 2000.

Analysts still see risks, mainly from the property sector. ‘We will see continued downward pressure stemming from the real estate and construction sector as they continue to be moribund,’ Sfakianakis said.

‘However the service sector, high oil production and industry will provide impetus as the UAE is going back to basics, and its economy is on a recovery path this year.’

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The UAE has so far escaped the unrest sweeping much of the Arab world, and its economy minister said this week he expected GDP to grow between 3 and 3.5 per cent in 2011.

Analysts polled by Reuters in March forecast the world’s third-largest oil exporter to expand by 3.4 per cent