UAE’s economic growth skyrockets

06 Apr

Posted by admin as Economy, UAE

The UAE notched up one of the highest economic growth rates in the world for the last five years, fuelled by a massive drive from banks, construction and real estate as well as traditional contributions from the oil sector, a new report reveals.

According to a study conducted by Global Research, part of Kuwait’s Global Investment House, the UAE’s compound annual growth rates (CAGR) reached 9.3% for the last half-decade, rivalling that of China and India and far surpassing most developed markets. BRIC countries (Brazil, Russia, China and India) have been humming along at an average annual gross domestic product GDP of around 9%, with China leading the pack by posting an average of around 10% for the last five years, according to statistics compiled by ChinaAbility.com. By contrast, economies in the West have languished, with the US GDP slowing from 4.9% in the third quarter to just 0.6% in the final quarter, according to the Bureau of Economic Analysis. Real GDP, a broad measure of a country’s economic activity, grew by 7.4% in the UAE during 2007 to register around $114.5 billion.

The oil and gas sector was the largest single contributor to the overall figure, with the energy industry chipping in more than one-third (35%) of the total GDP. But experts and officials have tried to assuage fears that the economy is over-reliant on the hydrocarbon industry, pointing to diversification of the marketplace, increased privatisation of industries and strong outlook for the price of crude. According to Central Bank Governor Sultan Nasser Al Suwaidi, the economy is in good shape and can still expect a growth rate of around 6.6% even if oil declines to $60 per barrel, according to reports by UAE daily, Emirates 24/7. In an effort to diversify the oil-reliant economy away from hydrocarbon-based revenue growth, the UAE has invested billions in other sectors such as tourism, banking and real estate developments.

The four emerging sectors contributed 16.5% to the UAE’s nominal - not adjusted for inflation - GDP in 2007, helping it rise to $190 billion.