(MENAFN- Khaleej Times) Propelled by fast-growing oil and non-oil sectors, the UAE economy, which is set to surpass the Dh1.4 trillion mark in 2012, is poised to pick up pace with 3.7 per cent growth in 2013.
The impressive resilience of the diversified economy is all the more reassuring with Dubai recording a steady improvement from a negative to two per cent growth in 2011 and a projected 3.4 per cent growth in 2012 and even a higher growth rate in 2013, according to the International Monetary Fund, or IMF.
On a consistent growth track for more than four decades since its foundation, the UAE, with its increased focus on diversification, has not only emerged as the second largest Arab economy, but also the most competitive, diverse and investor-friendly nation in the region thanks to prudent policies based on openness and diversification of sources of income.
The economic success story of the country has few parallels and the UAE is now ranked among the secure and stable economies offering one of the most sought-after investment destinations on the planet.
"The UAE as a whole is responding comfortably to improved non-oil and oil sector growth. However, the medium term challenge for the county is to further build on the good performance to strengthen its resilience, including in relation to GREs," said Masood Ahmed, director of the IMF's Middle East and Central Asia Department.
The real gross domestic product, or GDP, of the UAE is predicted to grow by 3.4 per cent in 2012, accelerating by 3.7 per cent in 2013 and sustaining a growth rate of 3.4 per cent in 2014, the bank said.
The current account balance in 2012 will be 10.2 per cent of the GDP, which will slide to 8.5 per cent in 2013, Standard Chartered said in a recent report.
According to the UAE Minister of Economy Sultan bin Saeed Al Mansouri, the economic reality in the world today requires the UAE to play a larger role in shaping a new global economic order, as well as in powering the social development debate.
HSBC has raised the pace of expansion of the UAE economy closer to the regional average, and said the country has shown resilience over the first nine months despite being more exposed to the European slowdown than any other Gulf country.
The bank has raised the UAE gross domestic product, or GDP, growth forecast to 3.7 per cent in 2012 and to four per cent in 2013.
Simon Williams, chief economist for Middle East & North Africa at HSBC, observed that the UAE continued to rely heavily on external demand without employing monetary or fiscal stimulus that is driving growth elsewhere in the GCC.
"Incremental revenues add to a very strong fiscal position for Abu Dhabi government, but we see little evidence so far of a pick-up in capital expenditure," Williams wrote in HSBC's "Middle East Economics" review.
The Federation of GCC Chambers of Commerce and Industry has forecast that with the UAE economy touching Dh1.4 trillion in 2012, the country will account for more than a fifth of the combined gross domestic product, or GDP, of the GCC, which estimated at around $1.5 trillion, and will maintain its position as the largest Arab economy after Saudi Arabia.
According to the latest issue of the "Why Dubai" study released by Dubai FDI, the foreign investment office of the Department of Economic Development, or DED, the predicted economic growth of the UAE represents a rate above 12 per cent in nominal GDP terms when compared to the size of the economy at Dh1.248 trillion in 2011.
The study predicts that between 2012 and 2015, real GDP growth in the UAE is expected to accelerate to an average annual rate of 5.2 per cent, with especially strong growth in 2014 and 2015, with the completion of even more infrastructure projects. Oil production is also forecast to increase substantially in 2014-15, reaching 2.8 million barrels per day.
"With its central location, distinguished lifestyle, and supportive economy, Dubai has become the preferred business and residential destination in the region," the study said, which was completed after extensive interviews with business leaders and investors.
Over the years, the UAE has emerged as an attractive hub for businessmen from all corners of the world and a magnet for foreign investment. With its high-quality investment climate and diverse and enormous investment opportunities that are available, the UAE leads the Arab World in indicators of the macroeconomic environment, the securities market, the corporate and institutional environment, and international financing.
Although the country concentrated on development of oil and gas industries as the backbone of its economy, the UAE at the same time pursued economic diversification. In order to meet the growing demand for energy, it is setting out to invest heavily in renewable energy and nuclear power so as to reduce the consumption of conventional energy sources and to increase oil and gas exports.
The hospitality market in the UAE, the second largest in the GCC region after Saudi Arabia, is expected to record an annual growth rate 10.4 per cent till 2016, driven by strong tourist inflows and steadily strengthening operating metrics, according to Alpen Capital.
While tourist arrivals in the UAE are likely to grow at a compound annual growth rate of 5.3 per cent between 2012 and 2022, hotel supply is expected to increase at 5.3 per cent from 96,992 hotels in Dubai and Abu Dhabi to 125,383 hotels in 2016.
Today, the UAE is the only Arab country defined as an 'innovation driven economy' in the World Economic Forum Global Competitiveness Report 2012-13.
The UAE is the first Arab country and 30th globally out of 187 countries to figure in the Global Human Development Report 2011 issued by the United Nations Development Programme.
The UAE has also significantly enhanced its global competitiveness ranking and also became first in the Arab world in "ease of starting a business."
Among 183 countries figured in World Bank's Doing Business Report 2013, the UAE now stands 26th, improving its position by seven ranks. In ease of starting a business, the country now stands first in the Arab world and ranks 22 globally, up from its 46th position in the previous report.
The Global Innovation Index 2012 released by Insead, an international business school, has said the UAE and Qatar were leading the Middle East in overall innovation performance.
In the Global Enabling Trade Report 2012 released recently by the World economic Forum, the UAE was ranked first regionally and 11th globally in terms of the availability and quality of transport infrastructure. With this ranking, the UAE outperforms countries such as the US, Finland and Belgium.
A Dubai Chamber of Commerce and Industry study, which placed UAE as the third most competitive economy in the region, observed that the federal government's effectiveness is high and the overall freedom to conduct business is well-protected under the existing regulatory environment as the country's tax regime, which is a major attraction for foreign investors, strengthens foreign direct investment inflows, as both income and sales taxes are non-existent.
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