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Wed 4 Nov 2009 12:32 PM

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UAE's real GDP growth in 2010 seen at 3.7%

Business Monitor Int'l says UAE likely to outperform GCC neighbours next year.

The UAE economy is seen outperforming its GCC neighbours in 2010 with economic growth of 3.7 percent, a new report has said.

Business Monitor International said the government's financial initiatives to support business in the company amid the global crisis had left the country "well placed to take advantage of the global recovery".

But in its report latest business forecast for the UAE, it said it had revised its real GDP forecast down in Q4.

It added that the conditions had "not really improved for the UAE over the past three months" and predicted the country to see a contraction of real GDP of 2.8 percent in 2009.

The report said: "Oil prices look weak once again, global trade remains subdued, banks continue to exercise caution in their lending and the property market remains dire. In this environment, government intervention is the only thing stopping the recession from becoming more severe."

BMI said its latest revision downwards was driven by a "combination of reduced consumer spending, a sharp drop in private investment and a contraction in net exports".

Noting the government's "ramping up" of spending in response to the downturn, it added: "The economy is fairly well placed to take advantage of the global recovery that we are forecasting for next year. Indeed, we see the UAE outperforming its GCC counterparts next year, with real GDP growth of 3.7 percent."

The report added that the proposed merger of property giant Emaar with several real estate firms owned by Dubai World "illustrates both the financial pressures that firms are currently under, and the extent of government control over the economy".

"This may prove beneficial in the short term, with the government pumping money into numerous infrastructure projects designed to improve the economy’s competitiveness," BMI said.

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