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Mon 8 Feb 2010 08:22 PM

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UAE central bank sees 'low' 2010 growth

Reuters poll predicts 2010 growth to be a 2.5%, still higher than 2009 levels.

The central bank of the UAE forecast the country's growth to be low in 2010 but better than the previous year, its governor told a media briefing on Monday, according to a source at the briefing.

Sultan Nasser al Suweidi told local media the central bank expected the growth rate in 2009 to be "slim", while the 2010 rate would be "low" but better than in 2009, the source said.

Analysts polled by Reuters in January predicted UAE growth would be 2.5 percent this year - the slowest pace in the Gulf. But the world's third largest oil exporter would still improve from an estimated contraction of 1.4 percent in 2009.

Simon Williams, regional economist at HSBC, said: "I expect the UAE to grow in 2010, but I think the rate of expansion will be at least two percentage points below the regional average."

According to the Reuters poll, Qatar will remain the region's leader with a 16.1 percent jump in gross domestic product this year thanks to massive expansion of its natural gas facilities, while Saudi Arabia, the largest Arab economy, is expected to grow by 3.8 percent.

Abu Dhabi, the UAE capital with nearly 60 percent share of the overall nominal GDP in 2009, will continue to drive the country's growth this year while assisting its fellow emirate Dubai repay debts of its top government-linked firms severely hit by the global financial crisis.

In a research note, Giyas Gökkent, chief economist, National Bank of Abu Dhabi, said: "For the UAE as a whole, low single digit real GDP growth - spearheaded by Abu Dhabi - is probable in 2010."

The International Monetary Fund (IMF) forecast last month that the UAE economy would grow zero to 1 percent in 2010 as the impact of Dubai's debt restructuring continues to be a drag on its performance.

Suweidi said: "We don't contradict their prediction but the IMF changes their forecast from time to time."

The IMF also said that UAE overall gross domestic product contracted by 0.7 in 2009.

The UAE central bank and Abu Dhabi lent an overall $20 billion to Dubai last year to help its neighbour restructure debts. (Reuters)

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