Oil find will boost economic prospects

The latest oil discovery announced yesterday by the Dubai Government is a shot in the arm for the emirate. The size of the oil reserve has yet to be announced. However, some reports suggest it is of significant volume. The Government has hinted at producing oil from the new field in a year's time. As this materialises, it will facilitate a speedy recovery of the economy at the beginning of next year.

Although oil represents less than five per cent of the emirate's $54 billion (Dh198.6 billion) gross domestic product (GDP), proceeds from oil exports provide a cushion for Dubai's economy from the fallout of the global economic crisis and commodity price shocks that often impact its vibrant economy.

Dubai has already reduced dependency on hydrocarbons by diversifying its economy and preparing for the post-oil era. Dubai's economic strength now comes from non-oil trade, services, aviation, tourism, transport and logistics.

As Dubai becomes increasingly integrated with the global economy, it needs this cushion to protect itself from international price shocks. The new oil find will add a strong layer to the cushion.

The news of the oil find could not have come at a better time for Dubai, especially two months after a section of the western media went on a smear campaign and almost wrote the emirate off.

However, most of the media barely realise that the emirate of Dubai and the country as a whole have cruised through a series of global economic and political challenges, such as the Gulf wars, the September 11 attacks, the outbreaks of Sars and H1N1, etc., over the past three decades. Each of these challenges has strengthened the country's ability to move ahead.

Similarly, Dubai as an emirate and the UAE as a modern country have emerged more united and stronger from the current economic challenges.

After the global financial crisis impacted Dubai in late 2008 like it did the rest of the world, the emirate was down temporarily, but not out. The new oil discovery will help accelerate Dubai's economic growth.