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Mon 28 Feb 2011 09:48 PM

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Dubai commerce group sees GDP growth pickup

Dubai GDP growth seen at three to five percent in 2011, services and trade to fuel expansion

Dubai commerce group sees GDP growth pickup
Dubais debt burden has kept investors wary but the regional trade hub has been spared protests raging through the Arab world

Dubai's economy may expand by up to five percent this year, the head of its chamber of commerce has said, adding that it is too early to quantify the local business impact of uprisings elsewhere in the region.

Dubai's heavy debt burden has kept investors wary but the regional trade hub, one of seven members of the UAE, has so far been spared protests raging through the Arab world, including neighbouring Oman.

"We expect three to five percent of real GDP [gross domestic product] growth in 2011," Hamad Buamim, director general at the Dubai Chamber of Commerce and Industry, said.

"I don't want to call Dubai an escape haven, but Dubai should be viewed as a very stable entry point into the Middle East," he said on the sidelines of a conference.

Dubai accounts for around 80 percent of UAE's non-oil trade.

He also said the Dubai government should extend its food reserves to cushion against spikes in global food prices.

The emirate imports around 80 percent of its food needs. In 2009, the UAE's Ministry of Economy announced plans to build up three month food reserves of essential commodities as a buffer against inflation and crises.

Omani protesters demanding jobs and political reforms blocked roads to a main port in the UAE-neighbouring sultanate, while rebels fighting entrenched Libyan leader Muammar Gaddafi downed a military aircraft on Monday.

Dubai's economy, which accounts for almost a third of the UAE's overall output, grew 2.5 percent year-on-year in the first nine months of 2010, the emirate's statistics office head said in February.

Direct non-oil exports surged 36 percent year-on-year in January-October 2010 boosted by the global economic recovery, the strongest rise in the last five years, while re-exports were up by 23 percent, a record increase, data from the emirate's customs showed.

"Service sectors, trading and logistics will see most growth," Buamim said. "We are trying to position Dubai as a gateway to Africa."

The chamber of commerce, established in 1965, has 120,000 members.

Despite growing trade, lending has yet to pick up as UAE banks are still hesitant to provide new credit following debt woes that has been weighing on Dubai since November 2009.

Concerns about Dubai's debt of around $115bn have eased since the state-owned group Dubai World reached a deal last September to restructure almost $25bn of debt.

But questions remain whether the emirate will be able repay some of $30bn worth of debt over the next two years, mainly at state-owned companies.

The International Monetary Fund expected Dubai's economy to grow by 0.5 percent in 2010, more conservative than the government forecast of 2.3 percent.

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