UAE lags Gulf on state infrastructure spending

Shuaa Capital considers 2.5% slice of GDP for 2010-2011 projects to be ‘uninspiring’
UAE lags Gulf on state infrastructure spending
BIG GAP: The UAE allocated 2.5% of GDP in 2010 and 2011 to infrastructure, while Oman plans to raise spending by 11% in its 2011 budget
By Gavin Davids
Sat 29 Jan 2011 11:37 AM

The UAE is trailing Gulf neighbours Saudi Arabia, Oman and Qatar when it comes to government spending on infrastructure, a report by Shuaa Capital has said.

Despite an increase in capital expenditure in 2009 to more than 4 percent of GDP, the UAE’s infrastructure spend lags behind the rest of the Gulf, relative to the size of its economy, the Dubai based investment bank said.

The Gulf state allocated 2.5 percent of GDP in 2010 and 2011 to infrastructure projects, a figure Shuaa said was ‘uninspiring’.

“When we consider the 2010 budget of oil rich Abu Dhabi, it is apparent that the authorities are being conservative with their spending plans, either because they want to make up the losses incurred in 2009 when the budget recorded a substantial deficit (9.1 percent of GDP according to our estimates) or because they believe they may need to provide funding to struggling government related entities during the course of the next couple of years,” wrote economist Khatija Haque.

Haque said the UAE was likely to see its economic recovery gather pace as confidence improved and the country benefited from higher oil prices in 2011.

This is turn could encourage a spike in government spending on infrastructure in future budgets over the next 20 years.

The UAE economy is believed to have emerged from recession in 2010, carried by an uptick in the global economy and higher oil prices.

International trade saw exports from the country grow almost 40 percent year-on-year from January to September 2010. Re-exports jumped by almost 20 percent in the same period.

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