UAE economy leaps 114 times since formation

The UAE’s economy has rocketed by nearly 114 times since the country was created from seven emirates in 1971 to become the second largest economy in the Arab world, the Minister of Economy has said.

Sultan bin Saeed Al Mansouri put the UAE’s gross domestic product at only around Dh6.5 billion in 1971, one of the smallest economies in the region.

In 2009, the GDP stood at nearly Dh914.4 billion, the second largest economy in the 21-nation Arab League after Saudi Arabia, he said.

“This means the country’s economy has jumped by nearly 114 times since 1971 as a result of economic diversification policies by the UAE leadership,” he told an economic seminar in Dubai on Thursday.

“As a result of these wise economic and fiscal policies, the UAE now controls the second largest economy in the Arab region,” the Minister said in its address, carried by local newspapers on Friday.

Mansouri said diversification programmes had also sharply depressed the oil sector’s contribution to the GDP as it accounted for only around 28 per cent in 2009 compared with as high as 70 per cent in 1971.

“Besides these policies, the UAE has also dealt with high professionalism with financial problems seen by many as a major obstacle to growth,” he said, referring to the Dubai World debt issue and the cash shortage crisis that hit the UAE banking sector in the wake of the 2008 global fiscal distress.

Reports by the IMF and several other international and regional institutions have classified the UAE economy as one of the most diversified in the region following a steady expansion in non-hydrocarbon sectors over the past two decades, mainly industry, services and the financial sector.

Despite a sharp contraction in the oil sector in 2009 because of lower crude output and prices, most non-hydrocarbons sectors in the UAE recorded growth and this largely offset the decline in the country’s GDP. While the UAE’s banks recorded lower earnings, their general performance last year was good as nigh loan loss provisions weighed on their total income.

Projections by a key Saudi investment firm showed the UAE’s non-hydrocarbon economy will expand slightly in 2010 before it sharply rebounds in the following two years on the back of higher oil production and prices.

After recording one of its highest growth rates during 2007-2008, the country’s non-oil GDP sharply slowed down to around one per cent in 2009 and growth is expected to further slacken to about 0.1 per cent this year, said NCB Capital, an affiliate of the Saudi National Commercial Bank.

In 2011, the non-oil sector is projected to recover by nearly 3.7 per cent and accelerate by about 4.1 per cent in 2012, it said.

It showed growth would be accompanied by higher oil prices and production by the UAE as it forecast the hydrocarbon sector, which contracted by nearly 6.3 per cent in 2009, will recover by about 2.1 per cent this year and pick up by 2.2 per cent in 2011 and around 4.2 per cent in 2012.
 

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