UAE real GDP up 1.29% in 2009

High growth in the non-hydrocarbon sector boosted the UAE’s real GDP by around 1.29 per cent in 2009 despite a decline of nearly 200,000 barrels per day in the country’s crude output, official figures showed on Tuesday.

The slight growth, sharply down from 7.4 per cent in 2008, is in sharp contrast with estimates by the International Monetary Fund (IMF) and other institutions showing the country’s real economy contracted last year.

The figures by the Abu Dhabi Department of Economic Development (ADDED) showed inflation plunged to only around 1.5 per cent last year from a record 12.3 per cent in 2008 while the trade balance recorded a surplus of about $16.1 billion despite a steep decline in exports due to lower oil output and prices.

Releasing its annual report, ADDED said the 2008 global fiscal distress had severely affected the UAE’s economy but noted real GDP recorded positive growth despite a sharp fall from the previous year.

It noted that the IMF had forecast a contraction of around 0.1 per cent in the UAE’s GDP in 2009 but stopped short from mentioning last week’s IMF MENA report showing the country’s real GDP dipped by 2.5 per cent.

“The IMF had forecast a contraction, in real economic growth in 2009 by 0.1 per cent… however, the National Statistics Center data refer to the growth of real GDP by 1.3 per cent in 2009, compared to 7.4 per cent in 2008,” it said.

“This was considered as a good result, despite the external challenges, which adversely impinged on the country's economy, which was open towards the affected international economies.”

The report showed the UAE’s oil exports shrank by around 200,000 bpd from 2.6 million to 2.4 million bpd following its decision to trim supplies in line with a collective agreement by the 12-nation Organization of Petroleum Exporting Countries to cut output to keep prices firm.

ADDED gave no figures on the oil sector’s contribution to GDP but showed the non-hydrocarbon sector picked up by 8.3 per cent from 6.3 per cent in 2008.

It showed the decline in oil production and a plunge of nearly 37 per cent in crude prices depressed the UAE’s total exports to around $209.6 billion in 2009 from $248.8 billion in 2008. Imports also dipped to nearly $193.5 billion from $219.7 billion as a result of the global downturn.

But the trade balance maintained a surplus of about $16.1 billion in 2009, lower than the $29.1 billion surplus recorded in 2008, when oil prices peaked at an average $95 and the UAE was pumping oil at near capacity.

“The fall in exports was expected due to the sharp drop in oil prices in global markets by more than 37 per cent last year….this fall, which exceeded the rate of decline in imports, resulted in the drop of the trade surplus.”

Turning to inflation, the report showed the rate tumbled to only around 1.5 per cent in 2009 from a record high of 12.3 per cent in 2008, when all other Gulf oil producers suffered from high inflation because of the weakening US dollar, strong domestic demand, and a surge in rents and food prices.

“The UAE recorded a substantial fall in inflation last year due to several reasons, including the drop in prices of oil, commodities and imports. The crisis has also led to a decline in global demand for most basic commodities, and depressed prices of construction materials, food and other goods and services,” it said.

“The significant decline in rentals and housing costs contributed to reducing the rate of inflation in 2009…it should be noted that this was one of major factors that led to the surge in inflation rates during 2007-2008.”
 

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