UAE firm on growth track

Dubai’s economy is well placed to benefit from the strong trade currents driven by the UAE on the back of higher government spending in Abu Dhabi and the rest of the region, Standard Chartered bank said.

“Given that 50 per cent of GCC trade passes through Dubai ports, we expect higher demand for imported goods, driven by government-backed large-scale infrastructure projects, to push up trade by nine per cent in 2013,” Standard Chartered analysts said in the bank’s Middle East and North Africa Focus report.

“The tourism sector is likely to have another strong year. Dubai airport passenger numbers were up 14.6 per cent year on year in January, and international passenger traffic reached 57.8 million in 2012, overtaking Hong Kong (56.5 million) for the first time,” the report said.

Analysts observed that Dubai’s non-oil economy is outperforming, underpinned by regional trade flows and its safe-haven status. Credit growth also should begin to improve following more than four years of very tight conditions, they said.

Overall, the UAE economy started 2013 in good shape, the report noted. “First, government spending out of Abu Dhabi is strong, with the emirate outlining strong medium-term spending plans. Second, Dubai’s economy is firmly on track, with the core trade and services sectors well placed to benefit from strong regional trade currents, underpinned by high levels of GCC government spending in 2013. Third, while credit growth has remained muted over the last four years, the non-oil recovery in Dubai and higher levels of spending in Abu Dhabi should support a moderate pick-up in credit growth as confidence levels and local banks’ loan-to-deposit ratios improve.”

With the Abu Dhabi Executive Council announcing Dh330 billion of capital spending in the emirate from 2013-17, the emirate’s economy is expected to grow by 5.2 per cent versus its 3.9 per cent real gross domestic product, or GDP, growth in 2012, Standard Chartered said.

Abu Dhabi’s infrastructure spending plans include two hospitals that will add about 1,200 new beds, 15 new schools in the emirate, completion of the New York University campus and a commitment to build about 12,500 housing units for nationals via nine different projects.

The report noted that since mid-2012, following a 2011 to mid-2012 review, stalled projects from Abu Dhabi’s pipeline have been given the go ahead. Among them, the long-awaited Louvre Museum project was awarded at Dh2.4 billion on January 8, having been put out to tender three times before.

The Abu Dhabi Executive Council expects the spending outlays to create 5,000 jobs for nationals in 2013.  The bank said much of Abu Dhabi’s robust growth should come from the non-oil sector, “with oil output remaining on par with 2012 production levels (estimated at 2.7 million bpd), curbing hydrocarbon-sector growth, which still drives 59 per cent of the economy.”


Posted On : 20 March,2013