Wednesday, Feb 15, 2012
--Dubai eyes 4.5% economic growth this year on logistics, tourism surge
--Support for government-related entities is ongoing
--Sheik Ahmed says Dubai will look at issuing bonds if there is a need
(Recasts. Adds more quotes from Sheik Ahmed, background.)
By Leila Hatoum and Asa Fitch
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Dubai is hoping its economy will grow by 4.5% this year as the city-state benefits from a boom in logistics, transportation, tourism and trade, while support for the emirate's government-related companies will be ongoing, the chairman of Dubai's Supreme Fiscal Committee said Wednesday.
Sheik Ahmed bin Saeed Al Maktoum said Dubai's gross domestic product is expected to have grown by 3% in 2011, up from 2.5% in 2010.
"Dubai's growth is steady, satisfying and positive," he said.
Sheik Ahmed's comments came as Mohammad Lahouel, the chief economist at Dubai's Department of Economic Development, predicted growth of 4.1% for this year, underpinned by a surge in trade, tourism, manufacturing and transportation and offset by further declines in real estate.
The growth "will be achieved in spite of the continuing decline in the real estate sector," said Lahouel.
Speaking to reporters later, Sheik Ahmed said support for Dubai's government-related entities is ongoing.
The question of the form and extent of state support for troubled firms came to the fore after Moody's and other ratings agencies raised the alarm last year over the debt situation at three government-related companies in Dubai--Dubai Holding Commercial Operations Group, DIFC Investments and the Jebel Ali Free Zone. Together, those three firms had $3.8 billion of debt maturing this year.
The managing director of regional corporate finance at Moody's Investors Service told Zawya Dow Jones earlier this month that poor visibility on government support for financially strained companies in Dubai has put a drain on their credit ratings and damaged investor sentiment in the emirate.
In terms of bond issuance, Sheik Ahmed said "if there is a need for bonds we will look into issuing some."
Back in December, Abdulrahman Al Saleh, the director general of Dubai's Department Of Finance, told Zawya Dow Jones that the Dubai government has no current plans for a sovereign borrowing this year, and any capital raising activity in 2012 is likely to be small-scale.
Dubai issued a 10-year bond worth $500 million in June, 2011.
-By Leila Hatoum and Asa Fitch, Dow Jones Newswires; +971-4-446-1686; leila.hatoum@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
15-02-12 0745GMT
