(MENAFN - Khaleej Times) The National Bank of Abu Dhabi, or NBAD, has revised its economic growth forecast for the UAE to 3.3 per cent from the 2.6 per cent it projected at the beginning of the year as the nation produced more oil, which yielded better prices.
NBAD has revised its estimates on the assumption that "oil output has risen", NBAD group chief economist Dr Giyas Gokkent said.
However, he added that "we assume oil production growth may be limited in 2013 and are thus pencilling in real GDP growth of 3.2 per cent year-on-year".
Speaking to reporters after issuing the first Economic Outlook Report on the GCC, Jordan and Egypt, Dr Gokkent said "the UAE is in a position to raise output given the availability of new capacity if events continue to unfold as they have in 2012 with Iranian output declining. This would result in an upward revision to our current growth estimate." Dr Gokkent said in 2011, real GDP growth accelerated to 4.2 per cent year-on-year, up from 1.3 per cent in 2010, on the back of oil prices. In Dubai, a 3.4 per cent year-on-year growth was driven by the wholesale/retail trade, manufacturing and transport/communication sectors.
UAE nominal GDP rose 19.3 per cent year-on-year to 339 billion as oil prices grew 35 per cent to 105 a barrel, which also increased Abu Dhabi's share in GDP to 64.8 per cent from 59.5 per cent in 2010.
The nation's crude oil output was up by five per cent year-on-year in the first half of 2012, from 2.7 million bpd to 2.8 million bpd and is targeting a capacity of three million bpd by the end of 2012.
"There are plans to invest 60 billion in the next five years to raise oil production capacity to 3.5 million bpd," Dr Gokkent said.
Lending growth has been hovering at three per cent year-on-year for some time and remains subdued, the report said.
Slow banking sector growth and greater scrutiny of costs has led to a decline in banking sector employment. The number of bank employees, excluding auxiliary staff, was down by three per cent from the end of 2011 to May 2012 and down by 8.2 per cent since the end of 2008. UAE banking sector data continue to point to a two-track growth with Abu Dhabi leading, it said.
Year-on-year, listed Abu Dhabi-based bank assets were up by 6.2 per cent, deposits 6.8 per cent and loans 6.6 per cent in June. This trend is likely to continue due to economic diversification drive.
Abu Dhabi's economy would grow 4.4 per cent in the year, up against an estimated growth of 3.5 per cent last year.
The nation raised 50 per cent more revenues from oil sales to 112 billion year-on-year.
Net investment income is estimated to have been flat, while service account registered a 36.8 billion deficit.
Forecasts point to comfortable current account surpluses of 8.2 per cent and 7.9 per cent of GDP in 2012 and 2013, respectively, which will allow further accumulation of foreign assets by sovereign wealth funds.
Annual headline inflation was just 0.95 per cent year-on-year in August, the fastest pace since July 2011, according to the NBAD report.
A decline in the rent category has been putting downward pressure on the consumer price index, or CPI, but this effect has eased in recent months. The official Dubai and Abu Dhabi CPI housing/utility prices categories have been roughly flat since February 2012 but are still down by 5.3 per cent year-on-year and two per cent year-on-year, respectively in August.
Annual inflation excluding food and rent was subdued at per cent 1.2 per cent year-on-year. "We expect annual headline inflation to rise to about two per cent in the course of 2013," the report said.
By Haseeb Haider