UAE Minister: Global financial crisis had minimal impact on UAE economy in 2008

H.E asserted that the fast effective actions taken by the government helped regain balance in certain economic sectors, following the difficulties they encountered as a result of the international financial crisis.

Such sectors included construction, real estate, financial services and oil. The effective actions adopted helped to guide some of these sectors into curative and disciplinary processes which maybe beneficial in the long run.

H.E added that the performance of the national economy for 2008 has passed through two stages prior and after the financial crisis.

The national economy, prior to the crisis completed its accelerated growth, supported by high growth rates of oil prices, as the price of oil per barrel reached $147 in July 2008. It then went through recess and reached its lowest level of $38.6 in December 2008.

Preliminary data issued by the Central Statistics Department of the ministry, indicated that total Gross Domestic Product (GDP) at fixed price amounted to Dhs535.6bn in 2008, at a growth rate of 7.4% against Dhs498.7bn, and a growth rate of 5.2% in 2007, whereas the GDP at current price totaled to about Dhs929.4bn in 2008 over Dhs729.7bn in 2007.

Several factors contributed to GDP growth, including the 36.8% rise in annual average oil prices. In 2008, the price of oil per barrel averaged out at about $94.50, compared with an average price of about $69.10 per barrel in 2007.

GDP contribution from non-oil sectors reached Dhs577.5bn in 2008, compared to Dhs467.9 in 2007. However, the percentage contribution from these sectors decreased to 62.1% in 2008, compared with 64.1% in 2007.

On the opposite side, percentage contribution of oil sector in total GDP rose from about 35.9% in 2007 to 37.9% in 2008, driven by the hike of oil revenue as a result of the increase in prices of crude oil.

H.E said that other economic variables continued their steady growth. Total fixed capital formation increased to about Dhs261.4bn during 2008, compared with Dhs155.9bn in 2007, a growth rate of 67.8%.

Final consumption expenditure amounted to Dhs483.9bn in 2008 compared with Dhs366.5bn in 2007, up 32%. Total exports of goods and services have rose 7.6% to Dhs746.7bn in 2008, compared with Dhs693.9bn in 2007.

Crude oil made up 36.2% of commodity exports in 2008, re-export 38.8%, free zones exports 11.2%, oil by-products 2.5%, gas 4.5% and other exports 6.8%. Total imported goods and services increased 3.2% to Dhs562.6bn in 2008 compared with Dhs545.3bn in 2007.

Preliminary data also indicates that the country had a surplus in its trade balance of Dhs184.1bn in 2008, compared to Dhs148.6bn in 2007.

H.E expected that the national economy will start to overcome the effects of the financial crisis during 2009, with positive economic performance and the emergence of signs of revival in financial markets during the second half of this year.

Infrastructural projects are expected to continue to be executed, and the government will continue to maintain the increase in the level of its expenditure on projects, despite the decrease in oil revenues as a result of declining international demand and the reduction in production.

The Ministry of Economy's initiatives have formed the basis of support for the continuous growth of the UAE economy during 2008. Such initiatives have paved the way for achievement of accomplishments and positive results at the aggregate economic level.

This has helped to enhance the ability of the economy to meet local and external challenges, maintaining economic stability, suitability of environment for business, cooperation with all countries and world economic conglomerations and international organizations.

The ministry has also made it one of its basic roles to drive maximum benefit from economic agreements signed with countries world-wide with the ultimate goal of enhancing growth and development.

The sound economic policies adopted by the country have lead to achieving excellent growth rates in various economic sectors, through development of the role of non-oil sectors in the components of the national economy.

The ministry has taken various necessary steps to ensure economic success in different sectors and maintaining continuous economic development in the future.

During 2008, various endeavors were taken by the ministry to promote the legal framework of the economic, investments and trade activities in the country, in addition to improvement of the competitive position of the country in the business area at both Arab and international levels.

The ministry is currently working on reviewing many of other existing laws in order to be compatible with the growing needs of the national economy and the increasing role of the private sector, in addition to the need for compatibility of such laws with the obligations of international competition.

H.E Sultan bin Saeed Al Mansouri, has issued a ministerial decision concerning working with the Unified Economic Activities Directory, in addition to unification of procedures and laws at the UAE level.

The directory is a basic step in the Unified Commercial Register Project, which aims to provide a database about licensed economic sectors in the country, their volume and invested capital. Such a database is entrusted to contribute to the proper and sound economic planning structure and for updating and modernizing economic laws and legislations in the future.

The ministry, throughout 2008, exerted various efforts to establish well-founded economic and commercial partnerships, entering into free trade agreements with its strategic partners and major world economic conglomerates, based on mutual benefits and joint interests emanating from UAE economic policies, which are based on economic growth in various sectors, diversifying investments fields and increasing competitiveness of productive sectors through establishing strategic partnerships compatible with international trend in such respect.

The various initiatives, internal and external activities undertaken by the ministry have contributed to consolidation of the position of the UAE economy at the international level, as has been reflected by the indicators issued by international organizations throughout 2008.

This has underlined the UAE's desire to implement the best international standards and adopt the best world practices in different fields, which have succeeded to draw world appreciation and respect for the UAE.

In this context, the Technical Federal Institute of Zurich University classified UAE in the first position at the Arab world level, and in the 35th position internationally from among 122 countries, as indicated in the 2008 ranking report for the countries which have shown maximum integration in the world economy, based on 24 diversified economic and social criterion.