Emirates GDP up 16.48%

(PATRICK CASTILLO)  

The UAE economy will surpass expectations and grow at 16.48 per cent in nominal terms in 2007, driven by higher-than-forecast expansion of the non-oil sectors and record crude prices, the Ministry of Economy said Saturday.

Earlier expectations of increase in the country’s gross domestic product, or GDP, had peaked at 16 per cent in October when the International Monetary Fund had predicted a GDP of Dh679.1 billion in 2007.

The Ministry of Economy said it expects the GDP for 2007 to reach Dh698bn, compared with the previous year’s Dh599.2bn, which was an increase of 23.5 per cent over 2005 in nominal terms and 9.4 per cent in real terms.

In a report, the ministry also expected non-oil sectors to grow by 21 per cent to Dh455bn, making up 65 per cent of the GDP in 2007. Total investment is expected to have risen to Dh144bn, with a growth rate of 19 per cent compared with 2006 when it was Dh121bn.

The private sector will play a big role in the volume of investments in 2007, contributing 58 per cent of total investments, the ministry said.

Ministry data show that foreign trade was 149 per cent of the GDP while the trade balance continues to be positive. Exports grew to Dh523bn in 2006 from Dh430bn in 2005. Oil was responsible for 41 per cent of exports in 2006.

Gross fixed capital formation grew by 10.7 per cent in 2006 to Dh121bn, against Dh93.8bn in the previous year, while the surplus in current accounts of balance of payment reached Dh130.4bn, up by Dh60.2bn from 2005. 

The report said last year the Ministry of Economy intensified efforts to set up economic and trade partnerships with several countries, and to enter into free trade deals with strategic partners and large economic blocs of the world.

Within the ministry’s effort to consolidate strategic partnerships, Minister of Economy Sheikha Lubna bint Khalid Al Qasimi visited the United States, China, Japan, South Korea, India, France, Belgium, the United Kingdom, Saudi Arabia, Libya and other countries.

During her US tour, the minister discussed with American officials means of developing economic co-operation and increasing investment opportunities. In Asia the minister discussed the establishment of joint investment projects.

Al Qasimi held talks with French, British and EU officials to push economic, trade and investment relations between the UAE and the European Union as well as sovereign investment funds as the UAE seeks to expand the scope of its investment in countries with which it has strategic relations.

The UAE last year managed to boost trade co-operation with several countries of the world, either directly or through the World Trade Organisation. Several trade agreements were signed.

The ministry also adopted procedures for the UAE to join WTO’s Information Technology Agreement and the country became WTO’s 70th member.

The ministry took measures to join the International Sugar Agreement and the International Sugar Organisation, which aims to establish a forum for sugar-producing countries and major importers.

The ministry followed up on the UAE’s initiative on raw materials, including aluminum, within current negotiations at the WTO. 

The report highlighted the growth taking place in the UAE economy. A survey of foreign direct investment by the ministry revealed that in 2006 foreign direct investment grew by 10.8 per cent to Dh68.63bn compared with Dh61.91bn in 2005. According to International Monetary Fund’s estimates, the UAE occupied the first position among Arab countries vis-à-vis foreign investment. The country occupied the 22nd position among the best economies of the world.

The International Monetary Fund praised the distinguished performance of the UAE economy, saying the rate of growth amounted to 9.4 per cent in 2006, one of the highest in the world.

Within the UAE Government’s endeavour to take necessary steps to ensure continued economic success, the Ministry of Economy drafted several economic laws and legislations such as the import-export law, consumer protection law and the law on the establishment of an insurance authority.

Existing laws such as the one on trading companies were amended. The ministry is currently reviewing several other laws to address the growing needs of the national economy and the rise in the role of the private sector.

The ministry also prepared draft laws for investments and companies. Both drafts are now being studied by the authorities concerned.

In the meantime, investment in the insurance sector reached Dh17,270bn last year. Of this, 57.1 per cent was in private shares and bonds and 28.2 per cent in assets. Until the end of 2007, the number of insurance companies operating in the country stood at 48.