The economic recovery in the United Arab Emirates is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty.

Growth reflects stronger tourism, logistics, and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government- Related Entities.

Higher oil prices are also contributing to a marked improvement in the fiscal and external positions of the country. Inflation rate at consumer level is expected to remain moderate at 4.5 percent in the country despite a rise in food prices internationally.  Property rents continue to decline. Besides, the UAE’s unemployment rate is at low level of 4.2 percent.

However, it must be noted that risks to the country’s economic recovery remain, including from possible economic spillovers of regional events. In particular, the current re- pricing of geopolitical risk in the region could lead to more challenging market conditions, which may put pressure on the entities that need to roll over external borrowing.

Forecasts indicate the UAE real GDP will grow by five per cent this year and a similar rate in 2012, considering the expected growth of six per cent in emerging economies, this rate of growth in the UAE is good. The UAE and Saudi Arabia will be among the countries leading growth in MENA.

Besides high oil prices, growth in the UAE would be fueled by a surge in the tourism sector, citing a 70-80 per cent jump in hotel occupancy in the first few months of 2011. Trade would be another strong growth sector and the current political unrest in MENA would give a strong push to Dubai as a key commercial centre in the world.

A sharp increase in the UAE’s trade sector this year and next year can be expected and the other sectors that will contribute to growth are telecommunications and transport besides in addition to infrastructure and financial services sectors.

The UAE’s GDP, the second largest in the Arab region after the Saudi economy, expanded by around 3.2 per cent in 2010 after shrinking in 2009. Real GDP recorded one of its highest growth rates of 7.4 per cent in 2008.

Strong oil prices will ally with an upsurge in tourism, trade and communications to lift the UAE’s economy by nearly five per cent in 2011, sharply higher than the growth rate in 2010.GDP growth will remain at a high level in 2012 and the level is considered as one of the best growth rates in the Middle East and North Africa.