UAE economy 'booming and diversifying' despite falling oil prices

UAE economy 'booming and diversifying' despite falling oil prices
Last year was the emirates' strongest year, said Sheikh Mohammed - despite record inflation and wobbles in the housing market.
2 min read
22 June, 2015
The non-oil economy in the UAE reportedly accounts for 69 percent of GDP [Getty]

The UAE economy had its strongest ever performance in 2014 and the outlook for 2015 is good, according to a statement released by Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and emir of Dubai.

The federation of seven emirates saw GDP growth of 4.6 per cent in 2014, while nominal GDP reached Dh1.47 trillion ($400 billion), according to figures released by the National Bureau of Statistics.

"Today we have a robust and diversified economic base, great confidence in the environment and the stability of our country, sureness and expertise to deal with a range of scenarios, and great optimism about the future and the projects we have launched," said Sheikh Mohammed.

     Real and sustainable development is the only guarantee for future stability in the Arab world.
- Sheikh Mohammed

The prime minister also called for economic integration in the Gulf to ensure regional stability, and to manage the current challenges facing the region.

"Real and sustainable development is the only guarantee for future stability in the Arab world," he said.

The UAE will continue implementing a long-term plan to ensure economic diversification away from the oil industry towards a knowledge-based economy, said officials. It is hoped this will decrease reliance on government-provided jobs.

Last year the non-oil economy grew by 8.1 percent and now makes up 69 percent of GDP, Sheikh Mohammed said.

Work will continue on infrastructure projects, including the expansion of national airports and the building of a rail network, as well as on developing tourist facilities, electronic infrastructure, real estate, and financial services.

However, by 2020 the economy's focus will be on research and development rather than construction, said ministry officials. National spending in this area is set to triple by 2021, and the percentage of the workforce it employs is set to increase from 22 to 40 percent.

Sheikh Mohammed made the announcement on his Twitter account:

This release of the statement coincides with predictions by the ratings agency Standards and Poor's that the value of Dubai's property market could drop by 10 to 20 per cent during the rest of 2015 and into 2016.

This follows three years of property sector growth, and is largely due to an increase in supply, reported The National.

Inflation in the UAE has, meanwhile, hit a six-year high, and there has been a surge in the price of housing and utilities.

The Dubai Statistics Centre said the consumer price index had increased by 0.6 per cent month-on-month. Meanwhile, housing and utility costs, which make up about 44 per cent of consumer expenses, soared 7.8 per cent year-on-year and 0.7 per cent from April.