UAE economy to grow despite low oil prices

The UAE economy is expected to maintain growth this year despite a sharp fall in oil prices as the country pursues plans to reduce reliance on volatile crude exports, Minister of Economy Sultan Al Mansoori said on Monday.

He told an investment conference in Dubai that the UAE has become one of the most attractive destinations for foreign direct investment (FDI), which jumped by nearly 25 per cent to $13 billion in 2014.

He said the surge boosted the total FDI to over $100 billion. “The UAE economy is expected to continue to grow despite the decline in oil fortunes. Although the UAE is now less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in our national economy,” Mansoori said at the annual investment conference.

“However, our continued efforts for the diversification of the economy are slowly but surely paying off. The UAE government has set its target to reduce the dependence on oil revenue to less than 10 per cent of GNP in the upcoming years,” he said.

Mansoori said the UAE economy, the second largest in the Arab world after Saudi Arabia, has made great strides over the years, with the country recording unprecedented growth, which can be attributed primarily to the successful economic policies pursued by the federal government. He said this has led to economic diversification and sustainable development across various sectors.

His figures showed the UAE GDP leaped 236-fold from Dh6.5 billion in 1971, when the UAE was created, to Dh1,540 billion by the end of 2014.While oil used to count for more than 90 per cent of the GNP in the 1970s, the contribution of non-oil sectors to the GNP increased to nearly 69 per cent at the end of 2014.

“Oil, our primary resource in 1971, today accounts for less than a third of the GNP,” he said.

Mansoori said the UAE made similar achievements in FDI, ranking first among Arab countries and 22nd globally in the Global Investment Index for 2015. His figures showed total FDI has exceeded $100 billion while the UAE recorded a sharp rise of 25 per cent in FDI to $13 billion last year.

“As we all know, foreign direct investment has immediate benefits such as providing capital for enterprises, creation of new job opportunities, increase of government revenues and surges in foreign currency reserves,” he said.

“However, the real impact of FDIs on economic development comes from indirect means such as technology transfer, scientific know-how, sharing management and organisational best practices, as well as fostering competition and innovation,” he said.

Mansoori added: “This leads me to the theme of this year’s Annual Investment Meeting - ‘Sustainable Development through FDI induced Innovation and Technology Transfer’. The current edition of the AIM is aligned with the UAE strategy to build an economy that is based on knowledge, innovation and creativity.”


 

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