UAE economy to hit Dh1 trillion this year: EIU

Higher oil prices will likely boost the UAE economy to a record high of nearly Dh1 trillion in current prices this year and the level will swell further in 2011, according to the Economist Intelligence Unit (EIU).

The increase will allow the UAE to maintain its position as the second largest Arab economy after Saudi Arabia and the second in terms of GDP per capita income, said EIU, part of the London-based Economist Group.

This rise means nominal growth is projected at around 9.3 per cent against a contraction of nearly 11.9 per cent in 2009, mainly because of lower oil prices.

But growth this year remains far below the sharp increase in the nominal GDP recorded in 2007 and 2008, when it leaped by 22 and 36 per cent respectively.

From around Dh914.3 billion in 2009, the country's nominal GDP is forecast to climb to an all time high of about Dh1 trillion, EIU's figures showed.

It projected GDP to swell further by nearly 15 per cent to Dh1.15 trillion in 2011 as crude prices are expected to be higher than in 2010.

EIU expected the UAE's real GDP to rise by around 2.6 per cent this year after shrinking by 2.7 per cent in 2009 due to lower oil output. It said the decline last year was caused by lower oil prices and production as well as a sharp downturn in the property market following the global fiscal crisis.

"Economic growth should pick up pace in 2011, although we expect only a modest increase in oil production owing to a slow recovery in demand. We forecast that real GDP will grow by 3.5 per cent in 2011," EIU's Middle East editor, David Butter, told Emirates 24|7.

His figures showed stronger oil prices would also sharply widen the UAE's trade surplus to nearly Dh143 billion this year compared with Dh79.6bn in 2009.

The projected surplus for 2010 is almost equivalent to the record high trade balance of Dh142.8bn registered in 2008, when the UAE netted its highest ever crude export income of more than $90bn due to a surge in oil prices.

EIU expected the country's trade surplus to hit a new peak of nearly Dh157bn in 2011 because of a projected rise in oil output and prices.

Follow Emirates 24|7 on Google News.