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UAE Economy to Record 2.7pc Growth: Citigroup

Declining sharply from estimated 6.7 per cent in 2008, as impact of global economic downturn spikes oil prices and the slump in nation’s real estate sector.

However, it sees economy rebounding to 5.2 per cent in 2010. The Citigroup’s forecast is most optimistic outlook on the UAE economy, in recent weeks as most economists projected a bleak picture of the GCC’s fastest growing economy, with forecasts range between 0.0-2.0 per cent.

The latest Global Economic Outlook report released by Citigroup predicts consumer price index (CPI) falling to 7.1 per cent in 2009, from a high of 12.2 per cent in previous year. For 2010, it expects a marginal rise to 8.3 per cent. The current account balance for 2009 is forecast at 7.8 per cent of the GDP, down from 23.2 per cent. For next year it is expected to surge to 12.6 per cent.

The report predicts a fiscal deficit of 1.4 per cent of the GDP, in sharp contrast from a surplus of 23.2 per cent last year. The deficit is projected to turn into a surplus of 2.5 per cent in 2010.

Dubai has unveiled plans to augment its economic growth by allocating 42 per cent more money for building more capacities in its infrastructure, transport, social services related projects in order to keep the economy on fast track.

Infrastructure spending alone will see a 33 per cent increase over 2008, with the largest portion of the overall budget, 45 per cent, will be allocated to road and transportation, Dubai municipality, and port projects.

The federal government in its budget for 2009, late last year allocated a 24 per cent increase in infrastructure spending versus 2008.

Abu Dhabi has not announced its budget as yet. But, government officials have vowed to continue with spending spree on building its modern infrastructure, continued investments into the strategic hydro-carbon sector.

haseebhaider@khaleejtimes.com