SHARJAH, United Arab Emirates: The United Arab Emirates on Monday cut its growth forecast for this year, with Economy Minister Sultan bin Saeed Al-Mansouri saying the economy would expand by up to 2.5 percent.
Last month the minister forecast 3.2 percent growth this year. The government revises its figures as often as every month and gave no reason for the downgrade.
"Up to 2.5 percent GDP growth in 2010 depending on oil prices," Mansouri told reporters, when asked about growth this year. "Definitely this is a positive supporting element to reinforce our performance in terms of the GDP."
"And I am also very positive it will give us some push in terms of utilizing some of these (oil) revenues towards injecting a lot of those into infrastructure projects … to be able to mobilize and energies the economy," he said.
Inflation, would be low, he said, reiterating his previous forecast for inflation of up to 2 percent this year, saying it was under control.
Analysts polled by Reuters expect the world’s third-largest oil exporter to see growth of 2.5 percent in 2010, following an estimated 1.4 percent contraction in 2009.
Debt restructuring in Dubai is expected to slow down recovery of the second-largest Arab economy this year, making it lag behind its regional peers.
The economy will, however, benefit from rising oil prices, which hovered around $84.85 a barrel on Monday, well up from lows of around $32 a barrel in December 2008.
UAE consumer prices rose 0.68 percent year-on-year and 0.1 percent month-on-month in March, following three consecutive months of declines as housing prices rose. Analysts are expecting average inflation of 2.5 percent this year.