Speaking to reporters, on the occasion of granting Wholesale Banking Licences to three international banks, he said that UAE will undergo low single- digit economic growth in year 2009-2010, as a direct consequence of the global economic meltdown, affected by the fall in oil prices and credit crunch.
The governor noted that nation’s real estate price declines were “due to psychological fears.” He said that however, the construction sector which is nation’s largest employer, will not be affected, since the government has no intention to cut-back on infrastructure spending, which will help stimulate growth and business activity.
Al Suwaidi was positive on the tourism sector, which attracts 10.7 million tourists per annum into the country, resulting in more shopping and more airline business.
The Governor said government spending on infrastructure will help the economic growth but declined to say whether or not this spending would be higher or lower than that seen in 2008.
The governor Central Bank of the UAE said that trade, including re-exports, which is the largest non-oil business in the country will continue to do well as local and regional demand will not be impacted by the crisis and as rents go down so will prices, he added.
On Dubai’s debt issue, he said that there will be a solution to the corporate debt of the emirate, which is maturing in 2009, 2010 and 2011 respectively.
Asked about revising the GDP growth estimates for the year 2008, Al Suwaidi said the global turmoil happened in the fourth quarter of the year, so all the impact will be reflected next year. Al Suwaidi said, “There is no issue of liquidity crunch in the country as it is only the cost of credit that has gone up.”
He said that the performance of the UAE’s economy in the year 2009-10 would not be much different to its peers in the Arabian Gulf region.
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