The economic growth rate of the oil-rich United Arab Emirates (UAE) is forecast to drop to four percent in 2008 from last year's 7.4 percent due to the impact of the global financial crisis, local newspaper The National reported on Saturday.
The prediction was made by Sultan Nasser Al Suwaidi, Governor of the UAE Central Bank, according to the report. The UAE recorded a growth rate of 7.4 percent in its GDP in 2007 that reached 729.7billion dirhams (198.8 billion U.S. dollars).
The rapid decline of oil prices from this year's peak of 147.27U.S. dollars a barrel in July to below 50 dollars a barrel this week will greatly reduce the oil revenue of the UAE this year, whose oil sector accounted for nearly 36 percent of its GDP in 2007 with 262.7 billion dirhams (71.6 billion dollars).
The UAE is the fourth largest producer in the Organization of Petroleum Exporting Countries (OPEC) with a daily output of 2.7 million barrels.
The global financial crisis emanating from Wall Street has made credit, which had been flowing freely before, a scarce resource around the world, including the UAE. The one-month Emirates Inter-bank Offered Rate currently stands at 4.3 percent, more than doubled from 2.0 percent in June.
The global credit crunch has also taken its toll on the UAE's property market, which is an important contributor to the country's economy. HSBC said in a report earlier this month that property prices fell in October by four percent in Dubai and five percent in Abu Dhabi, which is the first ever since 2002.
The country's largest mortgage lender Amlak Finance announced on Wednesday that it was temporarily halting new home loans as the rolling effects of the global credit crunch on Dubai's previously buoyant real estate sector continued to emerge.
Banks in the UAE would have to make provisions for falling property values, Suwaidi was quoted as saying, but adding that he was confident they would be able to service their debts.
Source:Xinhua
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