The United Arab Emirates economy grew by 4.2 percent in 2011 but is expected to expand at just three percent this year as oil pricesdecrease, the Gulf country’s economy minister said on Monday.
Gross domestic product jumped from 1.3 percent in 2010 to “4.2 percent in 2011,” Sultan bin Saeed al-Mansouri told reporters.
The figure is slightly lower than the International Monetary Fund’s estimate, which expected GDP growth in 2011 to reach 4.9 percent.
Improved oil prices, in addition to expansion in non-oil sectors, notably tourism, contributed to the oil-rich state’s rise in GDP, Mansouri said.
Oil sector revenues accounted for around 31 percent, while wholesale trade amounted to 13.5 percent. Tourism grew by eight percent.
The minister did not announce an official forecast for growth 2012, but estimated it would be “around three percent.”
“I am optimistic about 2012,” Mansouri said, citing an average oil price of 114 dollars a barrel in the first four months as a good indication.
Oil prices on Monday continued to slide on weak economic data from the United States and China, with West Texas Intermediate (WTI) trading at $81.64 per barrel in Asian markets.
Mansouri said an oil “price around $100 is the right price” for the UAE, OPEC’s fourth largest producer of crude.
Meanwhile, Mansouri complained that sanctions on neighbouring Iran over its controversial nuclear programme were hurting UAE trade as exports face a ban on financial transactions.
“Trade with Iran was always in consumable items… we should not stop that” he said, adding that “the issue is the embargo on financial transactions.”
“In that regard, definitely trade has been affected. We are complaining about that,” he said.
“If you want to export 20 tonnes of rice, what can you do with rice at the end of the day? But the financial system does not allow you to do that,” he added.
Dubai, one of the seven emirates forming the UAE federation, is a major hub for re-export business with Iran, and is home to a large Iranian community.
Sanctions on Iran’s banking sector have disturbed or slowed down imports, whose cost has increased on average by 20 percent, according to Iranian importers. AFP