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Dubai Growth may Slow to 5 Per Cent
ABU DHABI - Dubai, which envisaged 11 per cent growth up to year 2015, is looking at a period of a much slower growth, which would shrink its economic expansion to the range of 4-5 per cent, in the turbulent year of 2009.
“The Dubai Strategic Plan unveiled last year was based on the assumed economic growth of 11 per cent. But, this figure is not achievable now, under current scenario that we live in”, said Nasser bin Hassan Al Shaikh, director general of Dubai’s Department of Finance, in a brief talk with reporters, at a seminar held at Abu Dhabi Chambers of Commerce and Industry (ADCCI) on the impact of global financial turmoil on the Economy.
The director general revealed that the economic crisis erupted in the summer this year, when Dh200 billion worth what he called ‘hot money” suddenly evaporated from the banking industry, which was flooded with liquidity.
The two chief reasons were that government did not de-peg UAE dirham from US dollar and also for the reason that institutional investors wanted to square up their positions, in the markets elsewhere, after the financial crisis developed into a full scale recession.
Speaking on the lack of confidence among UAE’s banks especially in the inter-bank money market, in the wake of liquidity crisis,
He urged the economic stakeholders to be realistic, as gone were the days where credits were cheap and easy to obtain.
The Central Bank of the UAE has issued directives to all banks and financial institutions not to exceed the credit expansion, by a maximum of 10 per cent. He said that the total credit sanctioning could range between Dh950 billion-1 trillion, during the current financial year.
Credit expansion in the next year would be kept at a maximum of 10 per cent, about 50 per cent down from 2008, estimated figures of Dh1 trillion.
haseebhaider@khaleejtimes.com
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