UAE Poised For Two-year Slump

The UAE is poised for two years of slow economic growth as its property sector is hit by the global financial crisis and banks rein in expansion, the central bank governor said.

Growth in gross domestic product (GDP) in the world’s fifth-largest oil exporter would fall to low-single-digit levels in 2009 and 2010, Sultan Bin Nasser Al Suwaidi said, as an economic boom spurred by six years of high oil prices comes to a close.

Still, a slump in the booming property sector would be limited as the country continues to adopt an expansionary fiscal policy, although it will take steps to ring-fence its banking system, Al Suwaidi said.

UAE economic growth will fall by more than half in 2009 to 3.1 per cent from 7.5 per cent this year on lower oil output and slowing consumer spending, EFG-Hermes said yesterday.

Tourism would also slow and force hotels to cut room rates, he warned.