The UAE economy was affected by the global fiscal distress as was the case of most other economies but massive government financial measures allowed it to pull out with minimum losses, the Minister of Economy has said.
Sultan bin Said Al-Mansouri said such measures, involving heavy public spending and cash injections into the financial sector, were part of the “continuous keenness” by the UAE’s leadership to support the domestic economy, now the largest in the Arab world after Saudi Arabia.
“The UAE economy remains solid despite the global crisis, thanks to a set of measures and incentives that allowed it to overcome the worst stages of the crisis in a record short time with minimum losses,” Mansouri wrote in the latest issue of the Ministry’s quarterly magazine “UAE Economy.”
Mansouri was referring to a Dh120-billion cash injection from the Central Bank and the Ministry of Finance at the height of the 2008 global crisis to offset severe liquidity shortages in the banking sector.
The UAE also approved record high spending in the consolidated financial account, which covers the federal budget and spending by each emirate.
His figures showed the UAE’s GDP leaped from around Dh387.8 billion in 2004 to about Dh914.3 billion in 2009. It is projected to rise above Dh925 billion this year mainly because of higher crude prices and expansion in non-oil sectors.
“The UAE has become a key destination of foreign investment and business because of its balanced and solid economy,” Mansouri said.
He gave no budget figures but according to the Abu Dhabi-based Arab Monetary Fund, public spending soared to an all time high of Dh289 billion in 2009 despite a sharp decline in oil revenue because of lower prices and production.
The 2009 expenditure was way above the 2008 spending of Dh254 billion although oil prices in 2008 were nearly 58 per cent higher than in 2009.
Citing official data, the AMF said the decline was a result of a sharp fall in hydrocarbon export earnings to nearly Dh217.5 billion last year from a peak of Dh362.1 billion in 2008.
“Despite the sharp fall, the UAE consolidated finance account recorded a surplus of around Dh3.5 billion in 2009…this is compared with a record budget surplus of nearly Dh197 billion in 2008,” it said.