The UAE economy is rebounding from the effects of the global economic crisis, helped by a resurgence in crude.
Oil price rally helps fuel economic rebound
The UAE economy is rebounding from the effects of the global economic crisis, helped by a rally in the oil price this year and a resurgence in investor confidence, a senior Ministry of Economy official said yesterday. "Recovery has already started and we are going to see positive indications by the third quarter and fourth quarter," Mohammed al Shihi, the director general of the ministry, said on the sidelines of the Megatrends conference yesterday in Abu Dhabi.
"Oil prices are going up and confidence levels are coming back, things are going in the right direction," Mr al Shihi said. Several UAE officials have said over the past month that they expected the local economy to rebound as soon as the second half of this year. According to estimates from the IMF, the economy is expected to shrink by 0.6 per cent this year, against a global average contraction of 1.4 per cent.
Oil traded at about US$61 yesterday, against a December low of $32.40. On Sunday, representatives from the Abu Dhabi Economic Development Department said they expected the emirate's economy to rebound during the second half of this year. "We here in the UAE feel that the worse of the crisis is behind us. We see clear indications that the crisis is bottoming out. The economy is on the path of a U-shaped recovery," Mr al Shihi said.
One of the main drivers of economic growth in the UAE is likely to be continued government investment in infrastructure projects such as roads, industrial developments and desalination plants, Mr al Shihi said. Analysts have said that higher oil prices should help the Government maintain its spending, and avoid running a fiscal deficit. Mr al Shihi said he expected the UAE to remain competitive as a destination for international investments, despite the impact of the global financial crisis. "The UAE will continue to attract foreign direct investment," he said, adding the Emirates was responsible for "more than 50 per cent of the foreign direct investment in the region".