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DUBAI (AFP) — The economy of the United Arab Emirates might contract this year due to the global financial crisis after enjoying years of rapid growth, the economy minister warned in remarks published on Friday.

"There might be some contraction," Sultan bin Saeed al-Mansuri was quoted by Al-Bayan daily as saying.

The extent of the contraction "depends very much on the world economy and what will happen in the second half of 2009," he said.

Mansuri was speaking a few days after Standard and Poor's rating agency said the economy of Dubai -- the regional business and tourism hub that is part of the UAE federation -- is expected to shrink by two to four percent.

Earlier this year, the International Monetary Fund said it expected the UAE economy to grow by only three percent this year after expanding by 7.4 percent in 2007 and an estimated 6.9 percent in 2008.

http://www.google.com/hostednews/afp/ar ... yhKoAul5aQ

This one is more informative about the UAE economy and Dubai property market:


By Daliah Merzaban

DUBAI, March 19 (Reuters) - The United Arab Emirates economy could contract this year due to the global slowdown, the economy minister said on Thursday, as signs mount the global financial crisis has hit Gulf oil producers harder than initially thought.

Neighbouring Kuwait, where the ruler dissolved parliament on Wednesday after the government resigned, could face a downgrade of its sovereign debt ratings as political instability places hurdles before a stimulus plan, Moody's Investors Service said. [ID:nHKG208282]

Gulf policymakers had been reluctant to concede that the region, where economies boomed during a six-year oil price rally that ended last year, could witness economic contractions this year as oil prices slump and non-energy sectors face a slowdown.

Echoing comments of the UAE's central bank governor, the economy minister of the world's fifth-largest oil exporter said on Thursday the economy could shrink this year amid a crisis that has sent much of the industrialised world into recession.

"There could be some contraction... it depends on what happens in the world economy as a whole in the second half," Mansouri told reporters in Dubai, one of seven emirates in the UAE federation.

"There is no way of predicting what will happen by the end of the year due to the situation in the world economy ... I'd like to be conservative and say that the UAE will be affected by the slowdown in the world economy."

"We are ready to address any kind of issues with regards to liquidity that may affect the economy of the UAE."

Former boomtown Dubai has suffered a sharp downturn in its property market, where prices could fall almost 40 percent this year according to a Reuters poll this week. Standard and Poor's has said Dubai's economy could shrink 2-4 percent in 2009.

The UAE central bank and finance ministry have together launched 120 billion dirhams ($32.67 billion) worth of funding facilities for banks since September to unlock credit markets.

The central bank bought $10 billion of Dubai government bonds to enable it help state-linked firms to meet obligations.

"Banks at the present time have stabilised," Mansouri said.

"Liquidity from the government is available. It just depends on how we allocate it at the right time to the right entities."

The UAE and other members of the Organization of the Petroleum Exporting Countries have cut oil output since the autumn in an effort to shore up falling oil prices.

In a sign that the Gulf region would not escape the global crisis, Kuwait's government had to step in last year to rescue one of its largest lenders, Gulf Bank (GBKK.KW).

Kuwait has sought to stabilise the financial sector and boost confidence and drafted a $5-billion rescue plan. But the plan requires final approval, and the parliament's dismissal has cast uncertainty about how the Gulf state will proceed.

"These events reflect an erosion of institutional strength which is of particular concern given the current challenges presented to Kuwait by the global economic and financial crisis," Moody's said on Thursday.

Analysts think Kuwait may pass the plan by decree, bypassing tensions between cabinet and parliament. That hope led Kuwaiti shares to rise for the fifth time in six trading days on Thursday.

In the UAE, markets await word on the fate of troubled mortgage firms Amlak AMLK.DU and Tamweel TAML.DU, which have been brought under a umbrella of the federal government.

Mansouri said the two Dubai companies could still be merged.

"I think it is one of the good options we are looking at," he said, adding that liquidation was not an option for now." (Editing by Toby Chopra)

"We are ready to address any kind of issues with regards to liquidity that may affect the economy of the UAE."

"Liquidity from the government is available. It just depends on how we allocate it at the right time to the right entities."

There is a shortfall of 110 billion AED in the banking system in Dubai... So I'm not sure what kinda of liquidity is available?

"Banks at the present time have stabilised," Mansouri said.

Along with the Q1 results, the banks will have to declare their NPA's.. tht will show how stable they are...

Why is it difficult to admit that it is already contracting? If that was not the case that so many UAE expats would not have lost their jobs.

If only we can admit of an issue, can that be resolved. Otherwise the hole gets deeper and deeper and would be difficult to fill with all the sand in this part of the world.

worldguy wrote:Why is it difficult to admit that it is already contracting? If that was not the case that so many UAE expats would not have lost their jobs.

If only we can admit of an issue, can that be resolved. Otherwise the hole gets deeper and deeper and would be difficult to fill with all the sand in this part of the world.

Just like every other government in the world. The pain for the people must be recognizable at the latest moment in time. This way they get to keep their voters and say, we did something. Look, we print print print a bunch of paper with a face value on it, and our constituency is happy again! The inflated phoney money bubble that it forms however, is a problem for the next administration and our children...

Never ever trust a politician. Look at the facts and you can spot him evading the real deal. They all do it for party popularity and ratings.

"UAE economy might contract in 2009"

No Shit Sherlock !

desertdudeshj wrote:"UAE economy might contract in 2009"

No Shit Sherlock !

Tell that to your UAE politicians. They, not me, are still in denial.

I'm just passing the official statements.