UAE construction boosted growth to slow
Industry analysts predict that the UAE economy will post peak growth during the current year, and will likely lose steam sometime thereafter as a result of flat oil production and capacity constraints.
Boosted by a boom in the construction and service industries, the UAE economy in 2006 is surging to some 11.5 per cent according to reports by the International Monetary Fund, while the nation’s GDP growth is set to slow to 5.8 percent in the coming year.
"The growth rate this year will be one of the fastest in the world but these rates cannot persist,” sated Mohsin S. Khan, director for the Middle East and Central Asia Department at the International Monetary Fund (IMF), reported Gulf News.
“You will be hitting capacity constraints, especially in the construction industry," Khan added.
"We have said that the region needs GDP growth of six to seven per cent a year to create sufficient jobs for its people and that is where it will be".
The UAE is the Arab world's second-biggest economy, with 2005 GDP growth of 8.2 per cent to Dh357.59 billion according to UAE Central Bank figures.
"The nice thing is that this growth is not being driven by the government. It is private sector driven with a lot of partnerships," Khan said. Oil prices are expected to remain in the low- to mid-$60s a barrel over the next two years.
© 2006 Mena Report (www.menareport.com)