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UAE economy registers strong growth

The UAE economy recorded significant growth during the year 2005 as GDP surged to US$132 billion, registering an increase of 26.4% over the same period in 2004, according to an official report from the Ministry of Economy and Planning.

The UAE economy recorded significant growth during the year 2005 as GDP surged to US$132 billion, registering an increase of 26.4% over the same period in 2004, according to an official report from the Ministry of Economy and Planning.

The Economic Performance Report revealed strong all-round growth - particularly in the non-oil sectors, which showed a surge of 18.6% to US$85 billion from US$72 billion in 2004. Its contribution to the GDP stood at 64.3% last year.

According to International Monetary Fund (IMF) statistics, the figures place the UAE as the 37th largest economy in the world, above nations such as Malaysia, Egypt and the Czech Republic. The IMF has calculated the UAE’s GDP growth in real terms at 8% during 2005, and anticipates growth of 10.5% in 2006.

The report attributes the high GDP growth to the success of the UAE government’s policies that aim to establish a strong, diversified, viable economy.

On the world oil market, the report said the average rise of oil prices to US$54 a barrel in 2005 from US$36.1 in 2004, had an enormous impact on the industrial sector whose GDP expanded to US$47 billion from US$34 billion.

In 2005, the UAE carried out investment projects worth US$26 billion which also raised the Investment to GDP ratio to 19.3%. The budgetary surplus stood at over US$10 billion, while a trade surplus of US$44 billion was also recorded over the year.

The report affirmed that the UAE recorded a budget surplus for the first time after over 20 years of fiscal deficit in the budget. Domestically, the phenomenal increase in the number and capital of public joint stock companies had a significant positive impact on local stock markets.

The report said a large number of industrial units were set up in the industrial cities and free zones, whilst the launch of a series of new mega-projects in various sectors had granted a sizeable boost to the domestic economy.

“Internationally, oil revenues are still playing a major role in the UAE economy in general as high world oil prices have positively affected the average GDP in 2005 and helped the UAE to achieve a surplus in its trade balance,” the report said.

Excluding the oil sector, the contribution of the manufacturing sector to GDP reached 19.5% last year. Petrochemicals industries have also witnessed huge diversification, enabling the country to meet local demand as well as enter into international markets. The share of the wholesale and retail trade and maintenance to the GDP was 17% in 2005.

“Buoyed by a marked increase in residential and non-residential units, the real estate and business and services sector contributed 11.5% to the GDP,” continued the report. “Statistics showed that these housing units jumped to 847,000 in 2005 — an increase of around 180,000 from those registered in 1995.”

Reflecting the construction boom across the UAE, the building and construction sector added 11.2% to the nation’s GDP.

“The government services sector — education, health and social services — along with transportation, storage and communications contributed 11.2% and 10.6% respectively,” the report said. “In 2005, the UAE carried out investment projects worth US$25 billion. Investment ratio to GDP was 19.3%.”

The private sector is still playing a vital role in the investment sector, achieving 50.9% of the total investment in 2005, against 34.7% for the public sector. Government investment accounted for a healthy 14.4%.

Figures showed that the manufacturing sector represented 48.7% of the total investment of US$12 billion in 2005. The productive services sector received investment worth US$11 billion. Transportation, storage and communications attracted US$5 billion in investment during the same period.

Investment by the real estate sector equalled US$3 billion, reflecting the real estate boom at federal government, local government, and private sector levels. With 7.9% of total investment, the government, social and private services pumped in US$2 billion.

Most of these government-sourced funds were allocated to complete basic services infrastructure in the educational, health, social and security sectors, the Ministry report concluded.

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