DUBAI: The United Arab Emirates’ economy grew by around 1.7 percent in 2018, slower than projected despite a boost from higher oil prices, official preliminary data showed.
The UAE growth figures follow Dubai’s disclosure last week that its economy grew by 1.94 percent in 2018, its slowest pace since a contraction in 2009 when the economy was hobbled by a debt crisis.
Oil producer UAE had projected in December growth between 2.5 and 3 percent for 2018, with Gulf economies benefiting from higher oil prices after OPEC members and other producers cut output to tackle a supply glut.
In its latest quarterly report, the Central Bank estimated the economy grew by 2.8 percent in 2018, up from 0.8 percent a year earlier.
Economic growth was driven by higher oil prices and a robust performance by the non-oil sector, Economy Minister Sultan bin Saeed Al-Mansouri was quoted as saying by state news agency WAM late on Saturday.
The oil and gas sector was the single largest contributor to economic growth, accounting for around 30 percent at constant prices, according to preliminary data from the Federal Competitiveness and Statistics Authority.
The non-oil sector grew by around 1.3 percent to 1 billion dirhams ($272.3 million).
To offset the slowdown in economic growth, the Dubai government has taken measures to cut costs for key industries including aviation, real estate and education.
The Abu Dhabi government has announced a $13.6 billion economic stimulus package as well as several economic initiatives to ease the cost of doing business.
The UAE has projected growth of 3.5 percent for 2019.
The International Monetary Fund said in February it expects the UAE’s economy to grow by 3.7 percent this year.
UAE economy rebounds in 2018, but more slowly than expected
UAE economy rebounds in 2018, but more slowly than expected
- Oil producer UAE had projected in December growth between 2.5 and 3 percent for 2018
- Gulf economies are benefiting from higher oil prices after OPEC members and other producers cut output to tackle a supply glut
Global Markets: Shares skid as oil blasts past $100 after Iran strikes Gulf shipping
SYDNEY: Shares in Asia fell broadly on Thursday as oil prices roared 9 percent past $100 a barrel on reports of more ships struck in Gulf waters and terminal shutdowns — a jump that could rapidly stoke inflation and push global borrowing costs higher.
Investors took little comfort from the International Energy Agency’s plan to release 400 million barrels of oil from its reserves, the largest such move in its history. As part of that, the US said it would release 172 million barrels of oil from next week.
Brent crude futures jumped 9.2 percent to $100.37 a barrel, extending a rise of more than 4 percent overnight. US crude futures surged 8.1 percent to $94.26 a barrel.
Shares slid, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 1.5 percent, while the Nikkei dropped 1.4 percent.
Chinese blue-chips lost 0.6 percent and Hong Kong’s Hang Seng index skidded 1.2 percent.
Both S&P 500 futures and Nasdaq futures fell 0.9 percent. EUROSTOXX 50 futures were down 0.8 percent and DAX futures lost 1 percent.
Two fuel tankers in Iraqi waters had been struck by explosive-laden Iranian boats, Iraqi security officials said early on Thursday, while an Iraqi official told state media that its oil ports “have completely stopped operations.”
Bloomberg reported that Oman has evacuated all vessels from its key oil export terminal at Mina Al Fahal as a precautionary measure.
“The market remains very concerned in terms of what’s going on in the Strait of Hormuz, and basically, information that we are getting over the last 24 hours is not a good reading,” said Rodrigo Catril, a senior FX strategist at NAB.
“It sort of reemphasizes the view that we should be worried about this and the risk is oil prices are going to get higher from here rather than coming down.”
Iran had earlier stepped up attacks on merchant ships in the Strait of Hormuz, raising the number of ships struck in the region since fighting began to at least 16. Tehran has warned the world to get ready for oil at $200 a barrel.
Throwing more uncertainty into the air, US President Donald Trump on Wednesday declared the war on Iran has been won but he will stay in the fight to finish the job.
INFLATION RISKS
US data showed the consumer price index rose 0.3 percent in February, in line with forecasts and above January’s 0.2 percent increase. The report, however, was not regarded as particularly relevant given that the Iran war has started to fuel inflation.
In bond markets, the risk of rising inflation outweighed safe-haven considerations to shove yields higher globally. Yields on 10-year Treasury notes rose 3 basis points to 4.2374 percent on Thursday, having jumped 7 bps overnight.
Fed funds futures extended their slide as investors feared higher inflation would make it harder for the Federal Reserve to ease policy. Markets are just wagering one more rate cut from the Fed this year.
The danger of energy-driven inflation has led markets to wager the next move in rates from the European Central Bank could be up, possibly as early as June.
Nervous investors sought the liquidity of dollars while shunning currencies from countries that are net energy importers, including Japan and much of Europe.
The euro slipped 0.2 percent to $1.1539, after closing at the weakest level since November last year. The dollar inched up 0.1 percent to 159.12 yen, the strongest level since January when reported rate checks from the US Fed spooked yen bears.
The risk-sensitive Australian dollar lost 0.4 percent to $0.7122, having hit a more than three-year high of $0.7188 on Wednesday as bets for an imminent rate hike from its central bank grew.
