UAE economy on course for 4 per cent growth

Minister of Economy Sultan Al Mansouri says boost will be fuelled by government investment and broader sources of income.

Sultan Al Mansouri, Minister of Economy, left, and Anwar Gargash, Minister of State for Foreign Affairs, attend the World Economic Forum gathering in Dubai yesterday. Sarah Dea / The National

The UAE's economy will grow by about 4 per cent this year, fuelled by government investment and a broadening mix in sources of income, Sultan Al Mansouri, the Minister of Economy, said yesterday.

"Our GDP is over Dh1 trillion [US$272.22 billion], and last year we recorded a growth of about 4 per cent, a trend that is expected to prevail this year as a result of the Government's policy of diversifying sources of income, and investment in development projects," he said.

Mr Al Mansouri was speaking at the opening plenary of the World Economic Forum's (WEF) annual summit on the global agenda, hosted for the fifth time in the UAE yesterday. He is co-chairman of the event, which has attracted about 1,000 experts to discuss a wide range of topics, from geopolitics to climate change.

Mr Al Mansouri's positive outlook for the economy was echoed by Sami Al Qamzi, the director general of the Department of Economic Development and the fellow co-chairman of the event.

Dubai would also grow at 4 per cent this year, he said.

"The chief engines of this exceptional growth are trade, tourism, and logistics attracting investments, exports and re-exports - sectors, that have traditionally formed the bedrock of Dubai's evolution into a global hub," said Mr Al Qamzi.

Dubai attracted Dh16bn in foreign direct investment in the first half of the year, through 115 investments, he said.

Tourist arrivals grew by 10 per cent and hotel revenues rose by 19 per cent in the first half of the year.

"Altogether, five million tourists visited and stayed in Dubai during the first six months of 2012 and another five million are expected in the second half of the year," said Mr Al Qamzi.

The UAE economy has benefited from a further rise in oil output this year as many GCC states raised production in response to tougher sanctions against Iran. Continuing strength in non-oil trade, transport and tourism had also boosted activity.

"We would be comfortable with those [GDP] estimates," said Simon Williams, the chief economist of HSBC in the Middle East and North Africa. "We are looking for an increase in non-oil growth next year as the gains in oil output are unlikely to be repeated."

In a sign of the rising confidence officials have about Dubai's economy, the emirate may consider issuing debt if it felt it necessary to do so, Sheikh Ahmed bin Saeed Al Maktoum, the head of Dubai's Supreme Fiscal Policy Committee, said on the sidelines of the event.

A decision on any sale depended on "if it's a good time or not", he said.

The UAE economy has largely avoided the fallout from the twin crises of sovereign debt and fiscal woes entangling the euro zone and the United States.

"Despite the US and the euro zone still suffering from economic crisis, the Gulf states, Africa and Asia are becoming engines of the economy," said Anwar Gargash, the Minister of State for Foreign Affairs in a speech during the first day at the summit.

The challenges for emerging economies were finding sufficient resources and unemployment, he said.

But the single biggest challenge the Arab world faced was handling the fallout from the unrest in the region, said Mr Gargash.

"The regional issue we consider the most important is the continuing ramifications of the unrest and its impact on the region," he said.

"Still we have a very severe impact even though the unrest started two years ago."