UAE: Top capital exporter faces slowest economic growth in GCC
Published: Jul 29, 2010 00:19 Updated: Jul 29, 2010 00:19
DUBAI: Though the UAE has pumped more than $53 billion into foreign markets over the past two decades to emerge as the largest Arab capital exporter, its economy is forecast to see sluggish growth in 2010 and 2011.
A Bank of America Merrill Lynch report said the UAE's economy was to see one percent and two percent growth in 2010 and 2011 respectively.
The bank, in its Global Economic Weekly Report, said the UAE’s economy would be the worst performer in the region in both years. However, it will be an improvement over the 1.4 percent growth contraction witnessed by the country last year, the bank added.
Separately, a report by the UN Conference on Trade and Development (UNCTAD) showed that foreign direct investment (FDI) channeled by the UAE into global markets totaled $53.5 billion during 1990-2009, by far the largest capital flow out of the Arab World.
The report revealed that the FDI flow out of the UAE, the second-largest Arab economy, climbed to a record high of $15.8 billion in 2008 from $14.5 billion in 2007 before plunging to $2.7 billion in 2009 on the back of the global financial crisis and lower oil prices.
Saudi Arabia, which according to the BoA Merrill Lynch report will grow by 3.2 percent this year and 3.9 percent in 2011, came second in the Arab World in terms of capital exports, pumping $40.3 billion in FDI during 1990-2009.
In terms of FDI inflow, the UAE came second only to Saudi Arabia, attracting $73.4 billion during 1990-2009, according to UNCTAD. FDI flow into Saudi Arabia totaled $147.1 billion during that period while Egypt was ranked third, with FDI inflow of $66.7 billion, it added.
Morocco ranked fourth, attracting around $40.7 billion, followed by Lebanon and Tunisia, with $32.08 billion and $31.8 billion respectively, according to the report.
UNCTAD figures revealed that the bulk of the UAE’s FDI targeted neighboring countries, with $62.4 billion invested in the region. Saudi Arabia accounted for nearly 70 per cent of the UAE’s investments while Egypt, Morocco, Lebanon, Libya and Tunisia were also major recipients.
However, the UAE received $13.1 billion from fellow Arab nations, according to the UNCTAD report.
Qatar, whose economy was forecast by BoA Merrill Lynch to be the region's top performer in the next two years, overtook Kuwait for the first time in FDI outflow at $16.03 billion. The GDP of world's largest exporter of liquefied natural gas (LNG) is forecast to grow 11.3 percent and 9.6 percent in 2010 and 2011 respectively.
Oman is forecast to be the second-best performing country in 2010 with 4.6 percent GDP growth, improving to 4.8 percent growth next year, according to BoA Merrill Lynch.
Kuwait's economy, which shrank 2.2 percent last year, is expected to rebound with 2.5 percent and 3.1 percent GDP growth in 2010 in 2011 respectively. Bahrain is expected to see 2.4 and 2.8 percent growth in next two years, added the report.
In terms of capital exports, Kuwait pumped nearly $16.01 billion, followed by Libya with around $11.9 billion, according to the UNCTAD report.
The report revealed that the United States was the top capital exporter in the world, channeling around $4.3 trillion, more than a fifth of the world’s total FDI outflow of nearly $18.9 trillion.
France stood second with $1.71 trillion, Britain third with $1.65 trillion, and Germany fourth with $1.37 trillion. China also emerged as a giant capital exporter with $1.36 trillion, the report added.
