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Vol:01 Jan/08

UAE economy surges by 16.48% in 2007

UAE economy surges by 16.48% in 2007

The latest stats are not out yet, but initial reports hint that the UAE economy attained 16.48% growth in 2007. The stupendous showing could be ascribed to the unprecedented expansion of non-oil sectors like the real estate industry and record crude prices, according to a UAE Ministry of Economy statement released on January 5, 2008.

The results surpass forecasts by International Monetary Fund (IMF) which had predicted a Gross Domestic Product (GDP) of AED 679.1 billion for the country in 2007.

The UAE Ministry of Economy expects the GDP for 2007 to reach AED 698 billion, compared with the previous year's AED 599.2 billion, which was an increase of 23.5% over 2005 in nominal terms and 9.4% in real terms.

Total investment is believed to have risen to AED 144 billion, with a growth rate of 19% compared with 2006 when it was AED 121 billion. Gross fixed capital formation increased by 10.7% in 2006 to AED 121 billion, against AED 93.8 billion in 2005, while the surplus in current accounts of balance of payment reached AED 130.4 billion, up by AED 60.2 billion from 2005.

 
UAE GDP Growth Analysis (2000 – 2005)
 
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Non-oil sectors register 65% growth in 2007

In a report by the Ministry of Economy, the non-oil sectors are tipped to grow by 21% to AED 455 billion, which is 65% of the GDP in 2007. In fact, the UAE is expected to have 70% of its Gross Domestic Product generated from non-oil sectors including construction, real estate and financial services by 2010.

Contributions of non-oil sectors to UAE GDP in 2004 and 2005


According to a study entitled; ‘Investment Strategy: Capitalizing on the Petrodollar Windfall’ by NCB Capital, the investment branch of Saudi Arabia-based National Commercial Bank, the United Arab Emirates will lead Kingdom of Saudi Arabia, Qatar, and the rest of the Gulf Co-operation Council (GCC) members in reducing the dependence on oil and gas industry. Among the six member nations of the GCC, the UAE has been the most successful in expanding its economy, with the oil industry contributing only 35% percent of its GDP in 2007.

The UAE's oil and gas industry is expected drop to 29.7% of AED 1.1 trillion by 2010. Over AED 5.51 trillion (US$ 1.5 trillion) worth of infrastructure investments have been planned in the GCC till date.

Consumer spending in 2007

People in the UAE expend some US$20,000 annually on consumer goods and services; this is the highest average among all the Arab nations, according to a latest survey. In 2006 the UAE's private consumption, including spending by individuals and families on goods and services, amounted to US$84 billion. The figure works out as US$19,761 per individual for a population of 4.25 million, according to the 2007 economic report by the Abu Dhabi-based Arab Monetary Fund. The second-placed Qatar spent roughly US$ 10.07 billion on consumables and services, with an average of US$12,500 per person.

*Source: UAE Authorities & IMF Staff Estimates
Source: Ministry of Economy