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Sat 27 Nov 2010 04:37 PM

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UAE GDP growth seen at 3-3.5% in 2011 - minister

UAE's GDP should reach $270 billion in 2010 against $248.9 billion last year

UAE GDP growth seen at 3-3.5% in 2011 - minister
GROWTH RATE: Minister is optimistic about UAE in 2011, but concerned about European and North American economies (Getty Images)

The UAE economy is expected to grow by 3 to 3.5 percent in 2011, the Gulf state's economy minister said on Saturday.

Sultan bin Saeed al Mansouri also told reporters the UAE, which enforces global sanctions against Iran, hopes for a diplomatic resolution of the Western confrontation with Iran, a major UAE trade partner.

He said the UAE's gross domestic product should reach $270 billion in 2010. Nominal GDP had fallen to $248.9 billion in 2009 from $254.3 billion in 2008 after the global slowdown.

"I am very optimistic about 2011. But I am concerned about other economies in the world," Mansouri said, adding he hoped regions such as the European Union and North America could resolve their problems.

The UAE economy is expected to lag its Gulf peers this year as banks in the world's third largest oil exporter remain reluctant to lend due to a $23.5 billion debt restructuring by conglomerate Dubai World.

But Mansouri expressed confidence in UAE banks: "UAE banks are in a very stable financial situation right now."

On Iran, he said: "Iran is a very important trading partner. We will continue trade with them. The issue of Iran should be solved with peaceful negotiations. We will not want to lose the link."

The UAE has signalled it will rein back its role as a trading and financial lifeline for Iran after the UN Security Council imposed a fourth round of sanctions on Iran in June, over accusations it is developing a nuclear bomb.

In June, the UAE central bank told financial institutions to freeze accounts belonging to dozens of firms targeted by UN sanctions, also blacklisting 40 entities and one individual.

Mansouri expressed confidence that a solution would be found for troubled Dubai Islamic mortgage lender Amlak.

Mansouri said: "The Tamweel issue is solved and Amlak is in the process of being solved." He did not elaborate.

In September, Dubai Islamic Bank raised its stake in rival Islamic mortgage firm Tamweel to more than 57 percent, in a move expected to help revive lending in Dubai's hard hit property market. (Reuters)