Vol:15 Apr/08
IMF bullish on Middle East
IMF bullish on Middle East
International Monetary Fund (IMF) is bullish in its outlook for the Middle East and has raised its growth forecast for by 0.2 basis points to 6.1 per cent. This is a sustained growth till 2010. IMF has also predicted Middle East’s current account balance to increase to 23% of its GDP. According to analyses by IMF, any large cut in the US interest rates can stimulate domestic demand further in the region, leading to higher inflation.
On the up – Middle East economy
Inflation and pegged US dollar has caused a unique situation in the Middle East. The incomes of top oil exporters – Saudi Arabia, the UAE and Kuwait are expected to grow by 6 percent in 2008 and 5.9 percent in 2009. While inflation has forced many low margin businesses to rethink, the pegged currency has been positive in attracting International investors into markets like UAE.
The algebraic sum of inflation and pegged currency is very positive in UAE, with huge investments into the high yield property sector. Huge money supply and continued pegged currency may cause inflationary effects.
Estimates from the UAE Ministry of Economy indicate that the nominal GDP increased 13.3% from US$164.16 billion in 2006 to US$186.0 billion in 2007. According to the UAE Minister of Foreign Trade Sheikha Lubna Al Qassimi, the country’s GDP will grow 60.0% to hit Dh1 trillion (US$274.0 billion) by 2012.
The algebraic sum of inflation and pegged currency is very positive in UAE, with huge investments into the high yield property sector. Huge money supply and continued pegged currency may cause inflationary effects.
Estimates from the UAE Ministry of Economy indicate that the nominal GDP increased 13.3% from US$164.16 billion in 2006 to US$186.0 billion in 2007. According to the UAE Minister of Foreign Trade Sheikha Lubna Al Qassimi, the country’s GDP will grow 60.0% to hit Dh1 trillion (US$274.0 billion) by 2012.
Dubai’s high-yield realty
UAE GDP Growth Graph
Source : IMF
The UAE's non-oil gross domestic product (GDP) is expected to exceed 70 percent by 2010, according to forecasts by NCB Capital, a Saudi Arabia-based investment bank. Real estate and construction sectors are expected to be the new growth areas of the economy growing at a compounded annual growth rate (CAGR) of 25.4 percent and 21.6 percent, respectively over 2007-2010.
UAE is not an isolated economy, but in its internal practices and economy has insulated it from global financial meltdown. Dubai has witnessed constant investment into public utility and infrastructure into major projects like Dubai Metro and Al Maktoum International Airport. The renewed investor confidence in Dubai realty sector has led to surge of visitors into Dubai. Reports say that Dubai’s International airport handled around 34.3 million visitors in 2007 and expects this to be around 70 million in 2010. A new airport is under construction in Dubai, this is estimated to handle 120 million visitors. The Dubai World Central (DWC), a vast logistical city with housing and warehousing amenities has been conceived to cater to the burgeoning numbers of visitors to the emirate.
