By James Bennett
Rocketing oil prices and a flurry of new mega-investments driving growth in the Emirates, IMF says.
Rocketing oil prices and a flurry of new mega-investments boosted the UAE economy by 16% this year, the International Monetary Fund (IMF) has revealed.
The IMF said at least 80.8 billion dirhams ($22 billion) will be injected into the Emirates economy every year over the next decade, including a total of 128 billion dirhams into oil and gas projects, UAE daily Emirates Business 24/7 reported on Tuesday, citing a report released this month.
However, it warned that the country’s rapid growth has been “expensive”, particularly with inflation rising to record levels. Inflation in the UAE hit 9.3% in 2006.
“The UAE has enjoyed rapid economic growth, impressive by any global standard. Its challenge now is to address the housing constraint that is pushing up inflation while sustaining growth and ensuring macroeconomic and financial stability," the report said.
“Record high oil prices have generated increasing current account and fiscal surpluses and facilitated the build up of official foreign assets. But fiscal policy has remained prudent as evidenced in the decline in expenditures to the GDP (gross domestic product) and the non-oil fiscal deficit to the GDP.”
Projections by the UAE Ministry of Economy and Commerce reveal that the country’s GDP will jump by 16.5% in 2007, partly due to a surge in non-oil sectors such as industry, tourism, trade and construction.
By the end of 2007, GDP is expected to hit a record 698 billion dirhams, with the non-oil sector performing even better than the hydrocarbon sector, growing by about 21% to 455 billion dirhams.
Gross Capital Formation, which covers private and public investment, will rocket by 19% to 144 billion dirhams from 121 billion dirhams, the ministry said.