Saturday, May 29, 2010

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DUBAI (Zawya Dow Jones)--The economy of the United Arab Emirates is expected to grow 3.2% this year due to an anticipated pickup in global oil demand, the National Bureau of Statistics said Saturday.

The economy expanded by 1.3% in 2009, a year in which the impact of the global financial crisis "emerged clearly", the report said.

Minister of economy Sultan Al Mansouri said an oil price of $85 per barrel would support the 3.2% growth estimate, while he also remained "optimistic" that the country's economy will recover from the global slowdown.

"The range [of economic growth] I wish to see is between 2% and 2.5%," which can be supported by an oil price of $75 a barrel, Al Mansouri said.

The National Bureau of Statistics, in a report which also provided an overview of the country's economic performance in 2009, said it expects oil demand to increase near the end of 2010, which will help absorb excess supply and maintain prices between $75 and $85 a barrel.

Light, sweet crude for July delivery settled 58 cents or 0.8% lower at $73.97 a barrel on the New York Mercantile Exchange Friday.

"I feel very comfortable with the figure of $80," Al Mansouri said. "Eventually, it should settle around $80 to $85, that's what I see."

Saturday's report comes just days after the International Monetary Fund said it may revise up its growth forecast for the United Arab Emirates amid expectations that a settlement to Dubai World's $23.5 billion debt restructuring will boost the second-largest Arab economy.

IMF ESTIMATES

According to the fund, the U.A.E.'s economy will grow 1.3% this year, after shrinking 0.7% in 2009 as the global financial crisis hit oil prices, the country's main source of foreign currency income.

Al Mansouri said the IMF figures are "not necessarily as accurate" as the country's own. "We would recommend that you take our figures," he said.

The oil sector contributed 29.4% to gross domestic product in the U.A.E. last year, while efforts continued to be made to boost the non-oil sector.

"The economy began to diversify into service sectors, most notably into trade, logistics, tourism, financial services, and high-value manufacturing," the report said.

Al Mansouri said he hopes to increase the GDP contribution of manufacturing and industry to between 20% and 25% over the next five to ten years. The sector's share of GDP stood at 16.2% in 2009.

The U.A.E. also plans to increase oil production to meet growing demand from Asia, which is seen growing by 4% in 2010 and 2011, according to the report.

Inflation in the country is forecast to slow to 1.1% by the end of 2010, compared with 1.6% in 2009. It is expected to rise again to between 2% and 2.5% in 2011, as the global economy recovers.

Meanwhile, the National Bureau of Statistics said that the U.A.E.'s population stood at 8.2 million in 2009, while unemployment reached 4.2%.

-By Nour Malas, Dow Jones Newswires, +97150 2890223; nour.malas@dowjones.com

Copyright (c) 2010 Dow Jones & Co.

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29-05-10 0917GMT