Sultan bin Saeed Al-Mansouri also told reporters the UAE, which enforces global sanctions against Iran, hopes for a diplomatic resolution of the Western confrontation with Iran, a major UAE trade partner.

He said the UAE's gross domestic product (GDP) should reach 1 trillion dirhams ($270 billion) in 2010. Nominal GDP had fallen to 914.3 billion dirhams in 2009 from 934.3 billion dirhams in 2008 after the global slowdown.

"I am very optimistic about 2011. But I am concerned about other economies in the world," Al-Mansouri said, adding he hoped regions such as the European Union and North America could resolve their problems.

The UAE economy is expected to lag its Gulf peers this year as banks in the world's third-largest oil exporter remain reluctant to lend due to a $23.5 billion debt restructuring by conglomerate Dubai World.

But Al-Mansouri expressed confidence in UAE banks: "UAE banks are in a very stable financial situation right now."

On Iran, he said: "Iran is a very important trading partner. We will continue trade with them.

"The issue of Iran should be solved with peaceful negotiations. We will not want to lose the link (with Iran)."

The UAE has signaled it will rein back its role as a trading and financial lifeline for Iran after the UN Security Council imposed a fourth round of sanctions on Iran in June.

In June, the UAE central bank told financial institutions to freeze accounts belonging to dozens of firms targeted by UN sanctions, also blacklisting 40 entities and one individual.

Al-Mansouri expressed confidence that a solution would be found for troubled Dubai Islamic mortgage lender Amlak.

"The Tamweel issue is solved and Amlak is in the process of being solved," Al-Mansouri said. He did not elaborate.

In September, Dubai Islamic Bank raised its stake in rival Islamic mortgage firm Tamweel to more than 57 percent, in a move expected to help revive lending in Dubai's hard-hit property market.