UAE finance chief sees 'low single digit' growth in 2009

Central bank governor also says he sees no reason to raise interest rates in 2010.
UAE finance chief sees 'low single digit' growth in 2009
By Andy Sambidge
Fri 30 Oct 2009 08:07 AM

The UAE economy will show a low single digit growth figure in 2009, despite the impact of the global downturn on the country, in particular Dubai, central bank governor Sultan Bin Nasser Al Suwaidi has said.

In an interview with CNN's Marketplace Middle East programme, Al Suwaidi also said that he expected interest rates in the UAE to remain the same.

On the issue of economic growth, he said: "I would say that I think we will be in a low positive single digit figure in 2009. In 2010, it will still be in low single digits but it will be higher than 2009."

When asked about interest rates, he told programme makers: "I think we will leave them where they are because we still do not see any reason to increase them.

"We do not see any inflationary pressures and we still see markets that not are functioning efficiently."

The governor also said he saw no alternative to pegging the dirham to the US dollar.

"We have noticed there is tremendous correlation between our economy in general and the US economy and when there is growth in the US in our region and specifically the UAE," he added in the programme which is due to air on Friday.

"We do not see any alternative so far to the US dollar. The US dollar is the currency of international trade and the currency for investment."

On the issue of the UAE opting out of the Gulf monetary union, Al Suwaidi added: "We have opted out at this stage for several reasons one of them is the location of the GCC central bank.  

"The UAE has the most banks in the region so it makes sense that we place the central bank in the UAE."

He said the country was not considering returning to the monetary union "at this stage", adding that taking the GCC central bank away from Riyadh was "beyond our consideration".

On Thursday, the central bank deputy chairman said growth in the UAE economy could exceed 4.5 percent in 2010, adding that he was not particularly worried about inflation following a shake-out in the property sector.

He also said banks in the UAE were healthy and did not need a further injection of liquidity.

Omar bin Sulaiman, who is governor of the Dubai International Financial Centre (DIFC) and deputy chairman of the UAE central bank, also said UAE's real estate sector had bottomed out and growth was picking up.

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