Business | Economy
No recession, but slower growth, says Al Suwaidi
The UAE economy is not slipping into a recession just yet, but there is pressure on the economy to sustain its momentum of growth in the midst of a global financial crisis, UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said yesterday.
- By Himendra Mohan Kumar, Staff Reporter
- Published: 23:19 January 21, 2009
- Al Suwaidi says the economy will be going through an adjustment period.
- Image Credit: Gulf News archive
Abu Dhabi: The UAE economy is not slipping into a recession just yet, but there is pressure on the economy to sustain its momentum of growth in the midst of a global financial crisis, UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said yesterday.
"We are not talking about recession, but slower economic growth," Al Suwaidi told reporters on the sidelines of a meeting at the Central Bank in Abu Dhabi.
Al Suwaidi was hosting a French delegation led by its Central Bank Governor Christian Noyer. The meeting was also attended by chief executive officers of banks and other financial institutions operating in the UAE.
Asked about his outlook on the domestic economy for the next two quarters, Al Suwaidi said: "The economy will be going through an adjustment period. There are pressures on all economies. The pressure on the UAE is lower economic growth."
He added: "[The] world is going through a terrible fin-ancial crisis, [but] we are optimistic things will improve."
Al Suwaidi said economic recovery depends on the circumstances because "things are changing and evolving".
He said despite the global financial crisis, the funding of infrastructure projects in the Gulf Cooperation Council will go ahead.
"In the UAE, the SMEs [small and medium enterprises] will be put on the fast track. [As well], 26,000 new houses in the UAE will help our real estate industry," said Al Suwaidi.
The governor said the non-performing assets (NPAs) of UAE banks will be reviewed, but did not say if rising NPAs were a matter of concern.
Al Suwaidi declined to comment on the possibility of another interest rate cut by the Central Bank in the foreseeable future.
The central banks of the UAE and Saudi Arabia cut key interest rates on Monday by 50 basis points, bringing their domestic rates closer to US rates.
The UAE Central Bank reduced its benchmark repurchase rate by 50 basis points to one per cent to boost lending to shore up the economy. Previously, it took other confidence-building measures like providing swap facilities (dirham/US dollar) to banks operating in the country. Since the beginning of the last financial quarter of 2008, the UAE has pumped Dh120 billion into the national banking sector to inject liquidity.
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