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UAE GDP quadruples in 10 years

The non-oil economy has jumped from around Dh160bn in the beginning of this decade to an estimated Dh653.5bn in 2010 (FILE)

By Staff

The UAE has recorded one of its best economic and financial eras over the past decade, with its nominal GDP, revenue and trade nearly quadrupling to emerge as one of the fastest-growing economies, a semi official study has shown.

Despite a contraction in 2009 because of the 2008 global fiscal crisis, the country’s gross domestic product has leaped by nearly 15 per cent annually over the past decade, one of the highest growth rates in the world, said the study by the state-controlled Emirates Industrial Bank (EIB).

“The end of last year also marked the end of a rather eventful decade during which the UAE economy expanded four times. These ten years saw the quadrupling of the almost all major economic variables, namely GDP, oil revenues, non-oil GDP, imports and re-exports etc., despite the turbulence in 2009, which can now be seen as a mere aberration,” it said.

“While the economy was fortuitous in having high oil prices during most of these years, that decade would be more remembered for the huge strides made in the non-oil economy of the country…. the UAE economy is now recognised for several of its non-oil sectors and the economy is no longer seen as purely based on oil revenues and the spending thereof.”

The study showed that average growth rate during 2001-2010 stood at a staggering 15 per cent per year.

“It is true that growth rates for oil exporting economies are not very stable and fluctuate in a large range, ten years is a fairly large period for smoothing the fluctuations and establishing a secular trend and determining achievement. If it were not for its relatively small geographical and population size of the country, the UAE would rank among the leading growth economies of the decade, at par, if not ahead of the other leading economies of the world in terms of growth.”

According to EIB, only around one third of the growth is credited to higher oil revenue while the rest was achieved by non-hydrocarbon sectors like construction, real estate, manufacturing, banking and trade.

The study projected the UAE’s nominal GDP to have crossed Dhone trillion in 2010, a quadruple increase compared to around Dh250 billion in 2001. It said that one of the most important features has been that GDP grew even in the wake of the global financial crisis when many advanced, rich and developed countries of the West faced a downturn.

“The end of the decade was a challenge not only for the UAE economy but for the entire global economy, as the US inflicted its home grown crisis on the entire world. Because of the high role of both exports and imports, economies of the GCC countries are even more sensitive to international turbulences,” it said.

“However, the UAE economy was able to weather the storm both on the strength of healthy oil prices and a strong non-oil sector.”

The study noted that the oil sector played a key role in spurting the non- hydrocarbon economy as it enabled the
government to boost spending. Its figures showed crude export earnings swelled by more than four times in comparison to the beginning of the decade from around Dh80 billion in 2001 to an estimated Dh346.5 billion in 2010. It said the most remarkable aspect of this period has been that oil production increased by a mere 14 per cent because of OPEC output curbs.

“Meanwhile, the non-oil economy has jumped from around Dh160 billion in the beginning of this decade to an estimated Dh653.5 in 2010. There are three key divisions of the non-oil economy, primary (agriculture), secondary (manufacturing) and tertiary (services and others),” it said.

It said the rapid economic expansion meant a huge rise in demand and consequently imports went up in equal measure to the GDP. They even marginally outstripped GDP growth, the study said, adding that imports not only started growing in the new millennium, but also seemed to accelerate in the latter half of the decade following an explosion in import demand during 2005-2008 after which import growth somewhat moderated.

“Meanwhile re-exports grew even more rapidly, albeit on a smaller base. Since export revenues grew even more strongly, not only from oil, but also from export of services (e.g. airline sector, port handling etc.) trade surplus remained positively healthy throughout the decade.”

According to EIB, manufacturing activity was also considerably buoyed by an expanding economy and rising population.  It said the most direct impact was felt on construction materials and consumer goods industries.