The economy of the United Arab Emirates, the second largest in the Arab world, will contract by 2.4 percent this year as crude oil production falls and sectors from finance to tourism slow, Credit Suisse Group AG said.
“The economy is faced with numerous challenges at present, including not only the lower oil prices and the cutbacks in oil output, but also the moderation in cross-border financial flows, declining external demand for non-oil exports, falling tourism receipts and the property-market downturn,’ Credit Suisse analyst Berna Bayazitoglu said in a report dated June 17.
A rebound in oil prices is helping Persian Gulf economies emerge faster than others from the global slump. Crude is trading at about $69 a barrel today, more that double its December low. The International Monetary Fund forecasts that the U.A.E. economy will shrink 0.6 percent this year and expand 1.6 percent in 2010.
Gross domestic product will grow 2.9 percent next year as oil prices and production increase, Zurich-based Credit Suisse said. Its average oil price assumption for this year is $50 a barrel and $58 a billion for 2010.
The inflationary environment of last year will turn to deflation as consumer prices fall 0.6 percent this year and decline 0.8 percent in 2010, the bank said.
