Abu Dhabi: The UAE economy is estimated to grow more than 3 per cent this year and it is hoped that it will reach a sustainable annual growth of 5 per cent after that, a senior official of the UAE Central Bank said here yesterday.
"The country is again in recovery mode, with econ-omic growth reaching 2.5 per cent in 2010," said Nariman Abdullah Kamber Al Awadi, chief manager at the Central Bank's training and development unit. Al Awadi was speaking at a seminar organised by the Emirates Centre for Strategic Studies and Research (ECSSR).
Al Awadi said inflation in the UAE was at a low 1.7 per cent last year, but is estimated by the International Monetary Fund (IMF) to increase to 3.9 per cent this year.
Al Awadi said the objective of financial stability is to have a healthy and robust financial system that will enable it to weather stress situations and limit systemic risk.
"Financial stability at present is the top priority for the Central Bank of the UAE," said Al Awadi, adding the recent global financial crisis has been a challenge for the UAE's financial system.
Al Awadi said measures in the aftermath of the global financial crisis taken by the Central Bank which included providing liquidity support to banks and the federal government's guarantee of deposits at all banks in the UAE improved the liquidity situation.
"This allowed banks to increase their lending, albeit at a slow pace. It was 2.4 per cent in 2009 and 1.2 per cent in 2010," Al Awadi added. Al Awadi said the size of the UAE's gross domestic product (GDP) crossed $350 billion last year.
Al Awadi said global economic stability means avoiding large swings in economic activity, high inflation and excessive volatility in exchange rates and financial markets.
"The consequences of global economic stability are detrimental. Recession prevails, foreign direct investment disappears, [there's] high unemployment and consumers are forced to scale down their standards of living," Al Awadi added.
