Dubai's economy on growth track

 Dubai:  Dubai's economy will grow about one per cent this year after contracting nearly 1.3 per cent last year, the International Monetary Fund said yesterday.

"The current economic prospect of Dubai is much better than anticipated in the beginning of the year. We expect the economy to grow in the range of 0.5 per cent to one per cent this year," IMF Middle East and Central Asia Department head Masoud Ahmad told Gulf News.

The IMF official said the emirate's economy is witnessing a revival largely due to external demand driven by exports, tourism and logistics.

"Although Dubai's economy continues to suffer from a decline in internal demand, there has been a strong revival in trade and tourism," said Ahmad.

Participating in a panel discussion on the IMF's regional outlook for the Middle East and Central Asia, Farouk Soussa, Chief Economist for the Middle East at Citigroup, said Citigroup's projections of Dubai's economic growth are more optimistic than the IMF forecast.

"We expect about 1.2 per cent growth for Dubai this year.

"The domestic demand may have suffered due to the contraction in the real estate sector and the decline in bank lending, but there are clear signs that the economy is reinforcing growth through trade," he said.

"There are clear indications that Dubai's economy is successfully compensating for the decline in domestic demand with external demand," said Nasser Saidi, Chief Economist of the Dubai International Financial Centre.

The IMF expects the UAE economy to grow at 2.4 per cent this year and 3.2 per cent in 2011 after shrinking by 2.5 per cent in 2009.

The economy of Abu Dhabi is expected to grow 3.6 per cent this year, Ahmad said.

The IMF earlier this month forecast steady economic recovery in the Gulf, with Qatar leading the march with 16 per cent projected GDP growth this year, and 18.6 per cent in 2011, compared to 8.6 per cent in 2009.

Growth in Saudi Arabia is forecast to reach 3.4 per cent in 2010, and 4.5 per cent next year, from a modest 0.6 per cent in 2009.

Forecasting the outlook for the Middle East economies, the IMF said the region is likely to grow roughly twice as fast over the next two years as it did in 2009, but the region must do more to diversify its economies and create jobs.

The IMF forecasts the economy will grow by 4.2 per cent this year and 4.8 per cent next year in the 22-nation region stretching across North Africa to Pakistan.

That compares with growth of 2.3 per cent last year as the region struggled with lower oil revenues and other effects stemming from the global economic crisis.

Overall, the IMF said in its latest regional economic outlook that the Middle East is enjoying "a generally robust recovery" due to higher oil prices.