UAE's non-oil eco­nomic growth ris­ing

The Pak Banker - - MARKETS/SPORTS -

ABU DHABI:

Dur­ing the Global Fi­nan­cial Mar­kets Fo­rum, held in Abu Dhabi on Wed­nes­day, Blair, who gov­erned the United King­dom from 1997 to 2007, high­lighted on the no­tion that GCC, in par­tic­u­lar; Saudi Ara­bia should not de­pend solely on oil as a form of com­mod­ity.

For­mer UK prime min­is­ter Tony Blair sug­gested that it's cru­cial for the GCC to cre­ate di­verse non-oil eco­nomic growth. How­ever, eco­nomic of­fi­cials say the UAE is on the right track of grow­ing its non-oil GDP.

Dur­ing the Global Fi­nan­cial Mar­kets Fo­rum, held in Abu Dhabi on Wed­nes­day, Blair, who gov­erned the United King­dom from 1997 to 2007, high­lighted on the no­tion that GCC, in par­tic­u­lar; Saudi Ara­bia should not de­pend solely on oil as a form of com­mod­ity.

Al­though Saudi Ara­bia holds 15.7 per cent of the world's proven oil re­serves, Blair dis­cussed what would hap­pen be­tween the US and Saudi Ara­bia if the US did ever be­come self-suf­fi­cient, in terms of their oil pro­duc­tion. He noted that al­though the West will con­tinue to stand by their al­lies in the re­gion, it is none­the­less vi­tal to look at ways of cre­at­ing a dy­namic eco­nomic di­ver­sion.

The for­mer PM stated that gov­er­nance re­form is thus crit­i­cal in se­cur­ing a na­tion's econ­omy.

"The fall of prices makes it more ur­gent to do this re­form," added Blair. In Septem­ber 2015, a re­port by global trade credit in­sur­ance provider, Co­face, re­vealed that the GCC to­gether pro­duced 28.6 mil­lion bar­rels of oil per day, which was equiv­a­lent to 32.3 per cent of the world's pro­duc­tion. The fall of oil prices im­pacted eco­nomic growth in the GCC, how­ever, it was re­ported that UAE and Saudi Ara­bia have been less af­fected due to their eco­nomic di­ver­si­fi­ca­tion.

Sal­tem Iyi­gunm Co­face's Mena re­gion econ­o­mist said: "As oil con­tin­ues to be a ma­jor con­trib­u­tor to eco­nomic per­for­mance in the GCC, eco­nomic di­ver­si­fi­ca­tion is a vi­tal for Gulf coun­tries to en­sure con­tin­ued healthy growth."

"This has been show­cased in Saudi Ara­bia and the UAE, which are driv­ing sus­tained GDP growth through sig­nif­i­cant govern­ment in­vest­ment in non-oil sec­tors. In the UAE, the food and bev­er­age sec­tor is fore­casted to grow by 36 per cent be­tween 2014 and 2019," added Iyi­gunm. The re­port also par­al­lels sug­ges­tions by Khal­ifa Salem Al Man­souri, Un­der­sec­re­tary of the Depart­ment of Eco­nomic De­vel­op­ment in Abu Dhabi, who also spoke at the Fo­rum about UAE's grow­ing suc­cess in non-oil fields. Al Man­souri pointed out that by de­vel­op­ing other eco­nomic sec­tors, such as health­care and education, UAE's Cap­i­tal aims to grow its non-oil GDP by up to eight per cent in the next 20 years. Al Man­souri high­lighted al­though UAE's oil's con­tri­bu­tion to GDP grew to 50 per cent in 2014, com­pared to 2008 when it was below 40 per cent, the na­tion is nev­er­the­less "on track of driv­ing non-oil eco­nomic growth be­tween 6 and 8 per cent for the next 20 years."

"We are not in a panic mood in look­ing at oil as the pri­mary driver of growth," he added.

By 2030, it is ex­pected that the non-oil eco­nomic sec­tor will con­trib­ute 64 per cent of GDP, as re­vealed by Abu Dhabi Eco­nomic Vi­sion 2030.

The strong di­ver­si­fi­ca­tion of UAE's econ­omy will also in­clude the much-an­tici- pated Expo 2020, which Dubai won the right to host in 2013. Reem Ebrahim Al Hashimy, UAE Min­is­ter of State for In­ter­na­tional Co­op­er­a­tion, Di­rec­tor Gen­eral, Expo 2020 Dubai Bureau, said that the event is part of "Dubai's vi­sion of growth," not­ing that there will be "a lot of rev­enue com­ing from the Expo."

With over 25 mil­lion vis­i­tors ex­pected to at­tend, the Expo is thus ex­pected to gen­er­ate dy­namic rev­enue for the na­tion, in­clud­ing that from the rent, par­tic­i­pants, con­ces­sions and part­ner­ships, noted Al Hashimy. She also high­lighted that the 160,000 square me­ter in­fra­struc­tures for the Expo would be­come per­ma­nent.

Al Hashimy pointed out that al­though ex­pos are of­ten torn down, the UAE will in­sure what­ever is built will stay in­tact. "Ev­ery­thing that we are build­ing, we are ac­tu­ally keep­ing," she added.

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