UAE Economy Grew Around 4% In 2012, Seen Steady In 2013

The United Arab Emirate’s economy is estimated to have grown by around four per cent in 2012, little changed from the previous year, and a similar clip is seen in 2013, its Economy Minister said on Thursday.

“I am waiting for the (gross domestic product) figures (from last year) … but the estimate will be hovering around plus four per cent,” Sultan bin Saeed al-Mansouri told reporters on the sidelines of a ministry event.

“I think this year will be the same as there are no major changes, changes in oil prices or the general situation of the world economy so that is an indication it will hover around the same percentage,” he said.

In November, Mansouri estimated that the UAE’s inflation-adjusted GDP would grow between 3.5 and four per cent in 2012, below 4.2 per cent in 2011 as the global slowdown, partly due to the Eurozone debt woes, was expected to take toll.

But despite the global weakness, growth in the UAE non-oil private sector rose to a 19-month high in December as new orders increased sharply, a purchasing managers survey showed this month.

Robust government spending will continue fuelling growth in the $339 billion UAE economy as prices of crude, the source of most budget revenues, are expected to hold steady at slightly above $108 per barrel in 2013, a Reuters poll showed last month.

Oil-rich Abu Dhabi, one of seven UAE members, plans to spend $90 billion on development projects over the next five years to 2017, while trade hub Dubai has revealed plans to build a new city housing the world’s largest shopping mall and 100 hotels.

The Dubai housing market, where prices and rents crashed in 2008-2009, has been recovering gradually but bank lending in the UAE, the world’s No. 3 oil exporter, remains sluggish following the Dubai 2009-2010 debt crisis.

Central bank initiatives such as capping mortgages could also put a break on lending activity going forward.

Inflation in the UAE should remain benign at 1-1.5 per cent this year, Mansouri said. It eased to 0.7 per cent in 2012, the lowest level since 1990, when Iraq’s invasion of Kuwait hit regional economies, from 0.9 per cent in 2010 and 2011.

Mansouri also said that the ministry has completed the discussion on a long-awaited foreign investment law, which will allow the cabinet to approve up to 100 per cent foreign ownership in firms outside of free zones on a case-by-case basis.

The draft still needs to be debated in the Federal National Council, the government’s advisory panel, and the cabinet itself, he added.