UAE economy heading for 'mild recovery' in 2010
On Monday, Morgan Stanley announced that 2010 might see the UAE's current economic slump bottoming out, and the economy heading for a "mild recovery"; though the U. S. still hopes the economy to shrink in 2009.
It was revealed by the bank that the economy is being aided by the recent improvement in global economic momentum, the rise in oil prices over the past few months and the general stabilization in domestic markets; all of which helped it get back on its feet.
It should be noted though that Morgan Stanley warned domestic factors - like the effectiveness of monetary measures, the flow of domestic credit and the strength of bank balance sheets, as well as the ease of access to external financing - would all affect the speed and strength of the recovery.
Mohamed Jaber, an analyst at Morgan Stanley in Dubai, said in the report: "The strength of the recovery will depend on the momentum for global growth and the timely resolution of imbalances in its domestic real estate and credit markets." It was added by Jaber that most probably, the economy of UAE would contract by 2 percent as oil production declines and banks continue to refuse credit to the real estate market.
During 2008, the economy increased by 7.4%. Going by the Morgan Stanley observation, in 2009, the inflation in UAE would drop to 6.4 percent, compared to the 12.3 percent seen in 2008; with the cost of rents coming down due to increasing housing stock and a decreasing population.
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