UAE to get infrastructure spending boost

SINGAPORE: The United Arab Emirates’ (UAE) economy will grow at a pace of around 4% this year and next on the back of big infrastructure projects, its central bank chief said yesterday.

Last month, the government had projected growth of around 3.2% in 2010.

“The UAE economy will grow in 2010 and 2011 at an expected range of roughly 4%,” central bank governor Nasser Al Suweidi told an Islamic finance conference in Singapore.

“The UAE is embarking on a few landmark projects like the Emirates railway, nuclear power generation for peaceful uses and marine transportation network to service the region.”

These projects would help to diversify its economy.

Suweidi also said the economy contracted 2.1% at current prices in 2009 with gross domestic product reaching 932.6 billion dirhams (RM833.96 billion). He did not give the 2009 GDP growth in real terms.

The UAE statistics office said GDP grew 3.2% in current prices in 2009 and put the nominal GDP at 914.3 billion dirhams.

The UAE economy ministry said last month the world’s third-largest oil exporter grew by real 1.3% in 2009, although analysts have estimated a contraction of 1.4% as the crisis made the Gulf country slash its crude output, froze credit growth and Dubai construction projects worth billions of dollars were put on hold or cancelled.

The economy is expected to lag its Gulf peers this year as banks in the world’s third-largest oil exporter remain reluctant to lend following a Dubai debt restructuring.

Its banking system had weathered the financial crisis well as total assets to liabilities grew 4.2% to 1.5 trillion dirham, he said.

“The UAE is well-placed to take advantage of any growth in the economies of the countries in the region,” Al Suweidi said.

Assets and liabilities of Islamic banks in the United Arab Emirates grew 6.5% in 2009, deposits grew 9.5%, while loans and advances rose about 5.5%, he said. - Reuters