Falling oil prices won’t hurt the gross domestic product growth of the United Arab Emirates this year, a Ministry of Economy official told reporters on Tuesday.
“Oil accounts for less than 30 per cent of our GDP, so there will be no impact. The UAE economy is now very diversified,” said Mohammed Ahmed bin Abdul Aziz Al Shehhi, undersecretary at the ministry.
“The oil price impact doesn’t reflect highly in our GDP.”
Brent crude oil futures hit a four-year low of $87.74 a barrel on Monday, down more than $25 from their peak in June.
Private economists agree, however, that unless prices decline further and stay at those levels for at least a year, there will be little damage to the Gulf’s big oil exporting economies.
Although governments in the region rely heavily on oil income, they have built up huge financial reserves and have very low debt, so they can continue spending on economic growth if needed. Lower oil prices will not translate directly into lower real GDP growth, which will slow only if oil production decreases. Also, most Gulf private sectors have been booming.
A Reuters poll of analysts in September, when the oil price slide was already well underway, found they expected GDP growth in most Gulf Cooperation Council countries to accelerate slightly next year. In the UAE, GDP is projected to grow 4.5 per cent in 2015.