UAE's liquidity now in much better position, says Suwaidi

A liquidity problem that hit UAE banks because of the global credit distress has largely eased as they have completely ceased using an emergency fund facility offered by the government, the Central Bank Governor said yesterday.

After withdrawing around Dh10 billion of the Dh50bn facility announced by the Central Bank in late 2008, the country's 52 banks have totally stopped their requests to benefit from those funds, Sultan bin Nassir Al Suwaidi said. "This facility has not been needed to a great extent at this point because liquidity is now better… At this time, the ratio of utilisation of this facility is zero," Suwaidi told reporters after signing an education agreement with a London institute.
"Liquidity is now much better because markets are moving…they keep moving and changing and that is why sometimes you see huge liquidity, or high liquidity, or medium liquidity or small liquidity…the situation here is now much better and this is an indication that things are stabilising… I am not saying that the situation has greatly improved but there is better stability now."

Asked why banks are still cautious about resuming their normal lending activities, the Governor said: "I think it takes time for the banks to feel comfortable… when they feel comfortable, they will resume lending." Suwaidi said he was satisfied with the level of deposits with the UAE's 24 national banks and 28 foreign units.

Suwaidi said the UAE had taken measures to deal with the global economic crisis, referring to the Dh50bn facility offered by the Central Bank, the Dh70bn deposits by the federal government and the recent cash injections by the Abu Dhabi Government into the capital of five banks in the emirate.
"There are always ways and means to deal with crises… The federal government and the Central Bank are putting the right programmes to manage the present situation… As you know that in economic crises, all countries try to manage the situation… I am sure the UAE will manage," he said. – Emirates Business 24|7.

Dubai tops 'Middle East Cities of the Future' ranking by fDi magazine

Dubai is top of the league in the Middle East Cities of the Future ranking by fDi magazine, scoring highest points for economic potential, business friendliness, infrastructure and quality of life. Dubai scored 471 amongst 20 cities in the region evaluated, with Jeddah, Abu Dhabi, Manama, Riyadh and Ras Al Khaimah in the next five places, respectively.

Produced by the Financial Times group, fDi is the premier publication for the business of globalisation, and is regarded as the single most trusted source of information for companies involved with international expansion.

The Middle East Cities of the Future were ranked according to 76 criteria listed under Economic Potential, Business Friendliness, Tax '&' Other Costs, Human Resources, Quality of Life, Infrastructure and Foreign Direct Investment. Dubai ranked highest in four of these categories.
The result for Dubai is based on an evaluation of 76 parameters that, in essence, cover the entire aspects of the economy." He added: "One of the focal areas of DED is to create a robust and business friendly destination with utmost ease in setting up and managing businesses. The success of our approach has been reiterated by the high scores achieved in the fDi ranking.

DED's foreign investment office headed by Fahad Al Gergawi is dedicated to attracting regional '&' international foreign investment in Dubai, and one of the key objectives is to develop closer co-operation with key international investment partners." Al Gergawi said: "This top-ranking highlights the opportunities that exist in Dubai for investors when evaluating the potential for international expansion.

Dubai is very investor-friendly and enjoys a strategic location. The recognition as a leading destination by fDi magazine reinforces our commitment to ensure that our international partners realise and experience the competitive advantages offered by the Emirate." The Economic Potential category, in which Dubai topped the list, evaluated parameters such as 2009 GDP growth forecast, National GDP, economic initiatives, inflation, cash surplus, high-tech exports, industrial production growth and growth of urban population. "Winning this award and ranking high in many of the categories reflect Dubai's success in diversifying our economy, and the potential for growth that the Emirate offers despite the challenges that the state of the global economy brings at this point in time," explained Al Qamzi. - Emirates News Agency, WAM

UAE Economy to Record 2.7pc Growth: Citigroup

A Citigroup forecast expects UAE's gross domestic product (GDP) to grow by 2.7 per cent in 2009.
Declining sharply from estimated 6.7 per cent in 2008, as impact of global economic downturn spikes oil prices and the slump in nation's real estate sector.

However, it sees economy rebounding to 5.2 per cent in 2010. The Citigroup's forecast is most optimistic outlook on the UAE economy, in recent weeks as most economists projected a bleak picture of the GCC's fastest growing economy, with forecasts range between 0.0-2.0 per cent.

The latest Global Economic Outlook report released by Citigroup predicts consumer price index (CPI) falling to 7.1 per cent in 2009, from a high of 12.2 per cent in previous year. For 2010, it expects a marginal rise to 8.3 per cent. The current account balance for 2009 is forecast at 7.8 per cent of the GDP, down from 23.2 per cent. For next year, it is expected to surge to 12.6 per cent.

The report predicts a fiscal deficit of 1.4 per cent of the GDP, in sharp contrast from a surplus of 23.2 per cent last year. The deficit is projected to turn into a surplus of 2.5 per cent in 2010.
Dubai has unveiled plans to augment its economic growth by allocating 42 per cent more money for building more capacities in its infrastructure, transport, social services related projects in order to keep the economy on fast track.

Infrastructure spending alone will see a 33 per cent increase over 2008, with the largest portion of the overall budget, 45 per cent, will be allocated to road and transportation, Dubai municipality, and port projects.
The federal government in its budget for 2009, late last year allocated a 24 per cent increase in infrastructure spending versus 2008.
Abu Dhabi has not announced its budget yet. But, government officials have vowed to continue with spending spree on building its modern infrastructure, continued investments into the strategic hydrocarbon sector. – Khaleej Times

Abu Dhabi Economic Forum examines critical issues

Abu Dhabi economic strategy, the solid fundamentals of Abu Dhabi economy and its resilience will be the central themes of this year's Abu Dhabi Economic Forum (ADEF 2009).
The March 2-3 2009 event will examine critical issues such as the new shape and determinants of the world financial system, the new global environment for investment, the future of oil, and the role of government in closing the financing gap resulting from the crisis.

Abu Dhabi's strategy of partnering with global companies in the energy, education, health, tourism and basic industries will also be gauged, along with technology transfer.

ADEF 2009 will be attended by more than 800 participants from more than 25 countries, bringing together government leaders as well as leading businesses, banks, and global companies active in Abu Dhabi and the wider region.

Taking place at Abu Dhabi's Emirates Palace, the now annual high-profile forum is co-organised by the Department of Economy and Planning and Al-Iktissad Wal-Aamal Group, with the support of Abu Dhabi Chamber of Commerce and Industry.

It will also highlight the latest developments in Abu Dhabi's legal and regulatory environment for investment, the new fundamentals and opportunities in the real estate sector, how to make the most of a global cycle of undervalued equity round the world, and the post-crisis strategies of Abu Dhabi and Gulf leading companies.
The third successive ADEF will give the government of Abu Dhabi a platform for presenting its economic strategy and assessing its potential impact on the local economy, dealing with Abu Dhabi's role as a global economic player and the business and commercial opportunities that Abu Dhabi still offers local, regional and global companies.

HE Nasser Bin Ahmad Alsowaidi, chairman of the department of Planning and Economy in Abu Dhabi, stresses that the Emirate's economy has many advantages in helping it withstand and contain the effects of the global economic downturn while implementing the economic vision conceived and recently updated by the Abu Dhabi's political leadership.
" This vision aims at strengthening the Emirate's competitive edge and its world standing by focusing on developing the pillars of our economy namely, the infrastructure, the energy sector and basic industries, knowledge economy and last but not least education and scientific research.
' Undoubtedly, this year's forum provides us with an opportunity to present a comprehensive view of these efforts and objectives while also keeping our eyes on the global situation and its potential impact on the regional economy. – Emirates News Agency, WAM

UAE non-oil sector drives growth to record level in '08

The UAE economy soared by nearly 13.9 per cent to surpass the Dh800-billion-mark for the first time despite a sharp decline in oil prices in the last quarter of the year, semi-official estimates showed yesterday.
Both the hydrocarbon and non-oil sector contributed to the growth which the report said showed the UAE has the potential to withstand lower crude prices and the repercussions of the devastating global financial crisis.

From around Dh703bn in 2007, the country's nominal gross domestic product (GDP) surged by nearly13.9 per cent to Dh801 billion in 2008, said the report by the government-controlled Emirates Industrial Bank (EIB).
Its figures showed the oil sector jumped by 24.2 per cent to Dh305.5bn from Dh246bn while the non-oil sector swelled by around 8.4 per cent to Dh495.5bn from nearly Dh457bn in the same period.
"Achieving high growth rates despite the sharp decline in oil prices towards the end of 2008 is in itself a very good development as this demonstrates the strength of the UAE economy and its ability to overcome any repercussions of the global economic crisis," EIB said in its January economic bulletin. "This of course will allow the UAE to deal with any developments in 2009."

The report gave no breakdown of the GDP components apart from the manufacturing sector, which it expected to have grown by 13.5 per cent in 2008 to around Dh99bn from Dh87.2bn to maintain its contribution to the overall GDP at nearly 12.4 per cent, almost unchanged from 2007.
"Besides high growth, we expect that the decline in oil prices, the relative stability in local rents and the drop in global prices will lead to lower inflation rates in the UAE and this will of course positively impact living standards in 2009," it said.

EIB's projections are almost equivalent to recent forecasts by the Abu Dhabi Chamber of Commerce and Industry, which expected the GDP to grow by around 14.7 per cent to Dh800.3 billion in 2008. Both reports gave no figures on real growth but economists put it at around five to six per cent in 2008 and expected it to be slightly lower in 2009.

"As for 2009, there will be real growth in non-oil sectors but lower than the rate in 2008. I expect growth to be around four per cent. I cannot comment on the oil sector because it depends on the movement of oil prices and the UAE production. This means it is too early to predict growth in the UAE's GDP for next year," said Mohammed Asumi, a well-known Gulf economist.
Besides strong oil prices, the UAE economic growth was fuelled by a surge in construction projects, good banking performance in the first half, and an expected rise in gross fixed capital formation to a record Dh143bn in 2008 from Dh123.7bn in 2007, according to the Ministry of Economy.
The financial sector was also a good performer in 2008, with the current account surplus projected to soar to more than Dh150bn after hitting a record high of Dh135bn in 2007, Central Bank estimates showed.
Figures by the US Energy Information Administration showed the UAE earned a record US$88bn (Dh323bn) from oil exports in the first 11 months of 2008 and the income could exceed Dh330bn by the end of the year.
Strong economic performance in 2007 was accompanied with a surge in inflation in the UAE to a record 11.1 per cent. But the rate could be lower in 2008 following a decline in global prices and strengthening in the US dollar. – Emirates Business 24|7

UAE banks at high exposure to real estate sector

The UAE's banks have the highest exposure to the real estate sector among its regional peers, casting doubts on the asset quality of many, according to analysts.

Banks in the UAE and Kuwait have the highest exposure to the real estate sector, standing at about 35 percent and 31 percent respectively, according to statistics for the first half of 2008 revealed in a recent report by Credit Suisse.

However, Saudi Arabia's banking sector has the least real estate exposure standing at just 7.5 per cent of total loans, reported UAE daily Gulf News on Monday.