Gross Domestic Product 2009

The UAE Economic Report 2009 released by the UAE Ministry of Economy at the end of May 2010 recorded a growth in GDP of 1.3 per cent in 2009, with the non-oil sector contributing 71.6 per cent, compared to 66.5 per cent in 2008, underscoring the success of the nation's economic diversification initiatives.

In current prices, the UAE's GDP shrank by around 2.1 per cent to Dh914.3 billion in 2009 from a record Dh934.3 billion in 2008 mainly because of a decline in oil prices to an average US$60 in 2009 from about US$95 a barrel in 2008.

The report noted that the economy benefitted from a massive increase in public spending despite lower oil export earnings. From around Dh254 billion in 2008, the consolidated financial account, involving the federal budget and spending by each emirate, grew by nearly 14 per cent to a record high of approximately Dh289 billion in 2009. ‘This increase in government expenditure occurred at a time when government revenue fell by a massive 35 per cent from Dh450.3 billion in 2008 to Dh292.6 billion in 2009 due to lower oil prices and losses in investments abroad.

The breakdown of non-oil sector contribution to GDP is as follows:

Manufacturing - 16.2%  
Construction - 10.7 %
Wholesale and retail trade and repairing services - 9%
Real estate - 8.2 %
Government services - 8.0 %
Transportation, storage, and communication - 7.1 %
Financial services - 5.8 %
Hotels and restaurants - 1.8 %
Agriculture, livestock, and fishing - 1.7 %  
Electricity, gas, and water - 1.6 %
Household services - 0.5 %  

Predictions for 2010 include a GDP growth rate of 3.2 per cent led by a focus on industrial policies that will drive sustainable development across the UAE. Real GDP growth for 2010 is projected to be 2.5 per cent.

Inflation in 2009 was 1.56 per cent and continued to decline by 0.01 per cent at the end of the first quarter of 2010, compared to the same period in 2009. Inflation rose 0.88 per cent in May as food, hotel, transport and education costs inched higher. Forecasts put the rate of inflation at 1.1 per cent by end-2010 and 2 to 2.5 per cent by end-2011.

Robust Economic Fundamentals

There is no doubt that the UAE's economic recovery is gaining momentum as the Government initiates policies in support of a competitive knowledge-based economy led by innovative UAE nationals.

Analysts predict that Abu Dhabi's robust economic fundamentals will drive the UAE's growth in 2010, while Dubai is expected to return to growth in 2011. In the meantime, the continued retrenchment in construction and real estate sectors is offset by recovery in the emirate's core activities of trade, retail sales and tourism.

Optimistic forecasts for the remainder of 2010 are supported by trade statistics that build on positive trends in 2009. UAE Ministry of Trade figures indicate that the UAE's non-oil exports rose by 9.4 per cent in 2009 despite the global economic crisis and the decline in international trade. At the same time, the overall trade value decreased by 15.9 per cent, or US$181 billion (Dh664.27 bn), primarily due to a decline in imports of 20.6 per cent and the global trade decline of 12 per cent, thus contributing towards a 31 per cent non-oil trade deficit in the UAE's favour, and in an unprecedented economic surplus of over US$29 billion (Dh106.43 bn). This is a positive outcome of the crisis, one that import rationing policies have not been able to achieve in years.

According to the Federal Customs Authority (FCA), these positive trends continued in the first quarter of 2010: the UAE's non-oil trade rose by 5 per cent to Dh171.7 billion, up from Dh164 billion in the same period in 2009. While imports dropped 2 per cent from Dh113.6 billion to Dh113.4 billion, exports rose by 23 per cent from Dh14.1 billion to Dh17.4 billion. The value of re-exports rose 13 per cent from Dh36.3 billion in the first quarter of 2009 to Dh40.9 billion in the same period of 2010.

On average, UAE ports and customs handled 24,000 tonnes of cargo daily and 3,000 tonnes per hour in the first quarter. Customs at the UAE's points of entry levied new unified tariffs for 37 services from February, in line with Cabinet resolution No. 45 for 2009 and as part of the UAE's commitment to the GCC customs union and to other international conventions.

In March the Ministry of Foreign Trade released the first issue of the Trade Affairs Bulletin for 2010. The Bulletin provides the UAE's trade and business community with the latest news and updates on trade developments such as negotiations on free-trade agreements. It also monitors and analyses WTO agreements and related issues.

At the end of May, the UAE President, H.H. Sheikh Khalifa bin Zayed Al Nahyan, issued Federal Decree No. 33 of 2010 regarding the accession of the United Arab Emirates to the Revised Kyoto Convention, further facilitating and coordinating customs procedures.