In Theory: Why we fared better than others

The foreign media campaign about economic conditions in the UAE has declined, yet there are still some parties who do not want to see the facts objectively.

Meanwhile, the UAE responds by implementing giant projects according to schedule, paying financial commitments without delay and increasing general expenditure.

This was reflected by the UAE 2010 federal budget, the biggest in the history of the UAE at Dh43.6 billion, which excludes local government budgets, especially in Abu Dhabi and Dubai.

How can that happen in view of a tight global financial crisis and shrinking expenditure in most countries, including the countries from which the unfair campaign against the UAE was launched?

The answer is clear to us. From the beginning we underlined the magnitude of the financial crisis and its effects on economic conditions.

We also highlighted the methods to contain the repercussions of the crisis and how to overcome it before others.

Yet, this objective and knowledgeable point of view was overshadowed by the chaos created by well-established and highly influential media outlets. Moreover, we were accused of underestimating the repercussions of the crisis.

UAE response

The best response by the UAE came through figures and data, as well as completing projects within the timeframes announced before the crisis, except a few real estate projects which remained on paper because it was wise to postpone them during a crisis that caused cash scarcity in world markets.

The last of these figures was the announcement of the zero-deficit 2010 federal budget, which showed a 4.3 per cent increase in expenditure compared to 2009.

Another achievement was increasing the self-financing of the budget through growing federal incomes, according to a programme drawn up a few years ago which led self-finance to multiply from Dh7 billion in 1999 to Dh24 billion in 2010.

Keeping in mind that economic activity in the UAE and GCC countries has largely depended on government expenditure since oil discovery, we can imagine the magnitude of expected economic activity in 2010.

This would be a leap towards overcoming the repercussions of the global economic downturn.

In addition to spending on development projects, especially infrastructure projects for which over 17 per cent of the total budget was allocated, big portions of the budget were slated for health, education and housing sectors, which boost the economy.

Spending on infrastructure projects offers many job opportunities and activates the business sector in general. It is considered the real start of overcoming the stagnation suffered by world economies.

Besides the federal budget, expenditure is expected to increase in local budgets, which will boost the local economy and accelerate the process of overcoming the crisis.

Some positive indications have started to appear as the year comes to an end, including improvement in local financial markets, increasing profits of companies and banks, and an improvement in property prices.

Overcoming the crisis

Therefore, we repeat again for those who want to understand and evaluate the situation logically: We have been affected by the crisis, which excluded no one, but we made the most of the financial facilities available before the crisis.

We were also the first to put the crisis behind us and overcome its repercussions. We also proposed solutions for its negative effects, like financial violations in local companies and establishments, by enhancing disclosure and transparency in public transactions.

An economy is one unit and its components cannot be viewed separately — a common mistake among economic analysts which leads to either wrong conclusions or decisions. In both cases, the results are disastrous.

Dr Mohammad Al Asoomi is a UAE economic expert.