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UAE Growth to Surpass Most Positive Global Trends

UAE : 01 November 2010

Economic growth in the UAE is expected to reach 5.1 per cent annually on average over the next decade.  This figure surpasses even the most optimistic forecasts for global growth, according to the EIU.

The report recently published by the Economist Intelligence Unit stated that the upcoming growth phase in the UAE is likely to be due to non-oil industries.  This sector will expand to cover two thirds of the nation’s Dh 1 trillion economy, as stated by Jane Kinninmont, author of the EIU report.

Kinninmont commented that although 5.1 per cent growth looks farfetched compared to global growth of less than four per cent, given the UAE’s annual figures of 7.3 per cent average growth over the last ten years, it is entirely attainable.

Diversification in the Dubai economy will drive growth there, most notably in the tourism industry and trade, although the property sector is expected to remain low into the near future.  As more tourists flock in from China and India, Dubai’s fame as a tourist destination increases.

The future of UAE as reported by the EIU falls in line with forecasts the International Monetary Fund has made for the region.

Recently the director for the Middle East and Central Asia department of the IMF, Masood Ahmed, reported that a 3.2 per cent growth is expected for 2011 in the UAE.  This comes after 2009 saw a contraction of 2.5 per cent.

Kinninmont stated that an average annual growth of 4 per cent is expected for the entire GCC region over the next decade.  The non-oil industries are forecasted to grow at a faster rate than the oil and gas sector, 5.1 per cent annually for the non-oil compared to 3.3 per cent annually for oil.  This outpacing will see the non-oil sector dominate two-thirds of the economy across the region.

Although traditionally the oil and gas industry has been the anchor of each GCC member’s economy, a necessary push towards further diversification is underway according to the EIU.  This sector represents almost 80 per cent of export and government revenues and is currently dominating the individual economies of almost every GCC member state.

Kinninmont stated that reforms in education are vital to success in the region.  Optimally, the GCC nations will work towards converting their tangible oil riches into intangible, valuable human capital.  Policymakers feel this can be done through education and skill training reforms which will see the economy move from being single sector-based to being more diversified and including more skilled sectors.

The EIU report came to the conclusion that education reforms have earned top priority in economic policies throughout the GCC over the next ten years.

Past dips and slumps in the price of oil have made the GCC members aware of the risks associated with oil dependence, pushing them towards diversification.  Also, since the young population is in need of more positions outside of the saturated public sector, diversification away from the oil industry, which provides limited jobs, is important.  As noted in the EIU report, the GCC region recognizes that changes in the demand for oil and technological advancements are leading them to preparation for the post-oil era.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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