Dubai: UAE banks have made the necessary provisions to deal with the European debt crisis and a potential global recession is not a worry for the oil producer's business hub Dubai, top government officials said Monday.

The global credit crunch pushed the crude-reliant Opec member into a recession in 2009 when its economy shrank 1.6 per cent, its biggest slump since 1988, as oil prices dived and Dubai's property bubble burst.

A deepening debt crisis in Europe as well as a slowdown in the United States have increased odds for another global recession this year, pushing crude prices well off their 2011 peaks.

Asked about the impact of the Eurozone debt troubles, UAE Economy Minister Sultan Bin Saeed Al Mansouri said: "UAE banks have taken the necessary provisions to deal with these issues."

UAE banks, still hesitant to lend following Dubai's $25 billion (Dh91.8 billion) debt restructuring in 2010, have not commented on their Eurozone exposure but indicated that provisions would continue to rise this year in general as global uncertainty weighs.

Provisions risen

Provisions of UAE lenders against bad loans have risen steadily this year to Dh48.4 billion in July, their highest level since at least the end of 2008, central bank data shows.

The International Monetary Fund (IMF) said last week that Europe's debt crisis had increased the risk exposure of European banks by €300 billion (Dh1.4 trillion) and they needed to recapitalise to ensure they can weather any potential losses.

Al Mansouri also reiterated the government's forecast that UAE econ-omic growth was likely to accelerate to 3-3.5 per cent this year from 1.4 per cent in 2010, slightly below a Reuters poll forecast of 3.7 per cent, made in June. The UAE central bank governor in June forecast 3.5-4 per cent growth this year.

Dubai's Supreme Fiscal Committee chairman, Shaikh Ahmad Bin Saeed Al Maktoum, said at the same event he was not worried about the impact of a potential global recession on the emirate.

Robust oil prices of above $100 per barrel and a revival in trade flows and tourism have helped lift the economy of the UAE this year.