Despite global downturn, UAE economy set to grow
The UAE economy is expected to grow at a rate between 3.25 to 5 per cent in 2013 in a world still grappling with economic and financial challenges. And much of that growth is a result of government projects tendered in 2013, according to experts interviewed by Gulf News.
According to Dr Waddah Taha, chief analyst and economist at Zarouni Group, the closer estimate of UAE growth would be between 3.25 to 3.5 per cent for 2013.
“I am optimistic yet cautious about international challenges and their impact on the UAE economy,” he said. What is more important, however, is not growth rate but rather the containment of inflation and its negative effects, he cautioned. “We know that real economic growth is calculated after deducting inflation; once this is done we can judge that the economy is acting positively thereof.”
Taha added that the 2012 unprecedented prosperity is a by-product of many factors such as oil revenues, high government spending and improved business climate in the seven emirates.
Dr Numan Ashour, chief analyst and economist at CNBC Arabia, agrees. He said what’s most important is to control inflation as prices are getting higher while income remains capped. “My expectation is that the growth rate will be between 4 to 5 per cent in 2013 as the government will be financing real estate projects worth up to Dh300 billion in 2013.”
Rents and prices
Ashour added that in Dubai the rents and prices of properties increased by 13 per cent in fourth quarter of 2012 and this is expected to be the case in 2013 as many foreign, local and regional investors are heading towards Dubai to invest in real estate market as a safe haven. Ashour added that the UAE government has set targets for growth in 2013 for some sectors, remarking that the revenues in 9 to 10 months nowadays equal those of a whole year in 2011 and 2010. “The aviation sector is set to grow by 18 per cent in 2013, the tourism sector by 20-22 per cent and industry and trade sectors by 11 per cent,” he said.
Dr Ashour added that the government has given the green light to the banking sector to start financing real estate projects. “The banking sector which has deposits of more than $1.6 billion right now, up by 9 per cent from 2011, has been given a carte blanche to start financing defaulted projects and to facilitate financing new ones that help create job opportunities such as tourism hotels, malls and others,” said Dr Ashour.
The UAE economy is supported by an increased number of tourists. Dubai this year has seen 15 million tourists visit while Abu Dhabi managed to attract 2 million. Ras Al Khaimah has also done well with about 1 million visitors and in 2013 the number is expected to rise, said Dr Ashour.