The UAE current account surplus is expected to jump significantly by 367 percent to $36 billion (Dh132 billion) this year on increase crude oil prices and recovery in economy, according to MarketResearch.com, which specializes in economic and corporate researches.

“The current account surplus is forecast to recover to $36 billion or 13 percent of GDP in 2010 from a preliminary $7.7 billion or 3.1 percent of GDP last year.
This reflects a 26 percent increase in the oil price, a 2% increase in oil exports, a continuation in the global recovery and only a modest rise in imports,” the research said.
The current account forecast is nearly double to the IMF’s estimate of $19.7 billion for this year.
International ratings agency Fitch said last week that oil-exporting (Persian) Gulf countries will record fiscal and current account surpluses this year with crude prices at $70-80 per barrel. This will help countries to maintain their spending programs.
It projected that the UAE economy will expand 2.4 percent this, thanks to growing petrodollar revenues and Abu Dhabi’s massive spending program.
The forecast is almost in line with the estimates of Ministry of Economy and Economist Intelligence Unit (EIU) which predicted 2.5 percent and 2.6 percent growth, respectively. But GDP growth forecast is below Standard Chartered’s projection of three percent and higher than the Arab Monetary Fund’s two percent for the current year.
“Overall UAE growth is still expected to be 2.4% this year, led by strong growth in Abu Dhabi due to rising hydrocarbon production and strong growth in government spending, with a modest pick-up in the private sector,” it said.
The research house projected that inflation will stay stable as increase in commodity prices will offset drop in rents and house prices.
“Inflation is likely to remain subdued despite the pick-up in world food prices and an expected jump in December on base effects. Rents and house prices are set to fall further and, along with weak domestic demand, US dollar strength and positive real interest rates should keep inflation close to one percent this year, before rising to 2.5 percent in 2011,” it said.
The report, however, gave a dismal outlook for Dubai for 2010, projecting another contraction in the economy this year due to the debt issue and woes in real estate sector.
“Dubai’s GDP is forecast to contract a further one percent this year after a fall of around 2.5 percent in 2009, with activity constrained by continuing debt and real estate problems and the need to tackle weak public finances. But on the positive side, trade, logistics and services are benefiting from the revival in world trade and growth, as evidenced by a surge in hotel guests and airport traffic,” it added.
(Source: emirates247.com)
Rising oil prices and recovery in UAE economy will help post higher surplus. (file photo)