Trade surplus to surge to $73b
Driven by higher oil revenues, the UAE's current account balance is projected to grow by a record $24.2 billion or 58 per cent in 2008 to $65.9 billion while the country's balance of trade is poised to surge 60 per cent to $72.5 billion in 2008, the International Monetary Fund (IMF) said.
In 2007, UAE's current account balance —the sum of the balance of trade (exports minus imports of goods and services), net factor incomes (such as interest and dividends) and net transfer payments (such as foreign aid) — rose by 16 per cent to $41.7 billion from $35.9 billion in 2006. The surge in the current account balance is driven by a record jump in exports of goods and services, analysts said.
According to the latest findings by the IMF, in 2008, the UAE's balance of trade will swell by $27.3 billion to $72.5 billion. In 2007, the country recorded a balance of trade of $45.2 billion, and in 2006 it was $38.7 billion. IMF's latest statistics projects UAE's exports of good and services to reach $206.5 billion in 2008 from $165.7 billion in 2007, while imports to grow from $120.5 billion in 2007 to $134 billion in 2008.
With a predicted 58 per cent growth this year, the current account balance will account for 27.5 per cent of the country's GDP in 2008. In 2007, current account balance accounted for 21.6 per cent of the GDP. According to IMF projections,
UAE's nominal GDP is expected to surge 24.5 per cent from $192.6 billion to $239.9 billion in 2008.
The upbeat current account surplus outlook given by the IMF is contrary to the forecast made by Oxford Economics, a world-leader in economic forecasting. According to Oxford Economics, despite the pick-up in UAE's non-oil revenues as the economy continues to diversify, the country's current account surplus is poised to decline to about 7.5 per cent of GDP in 2008 and to 3.5 per cent in 2009.
A country's current account includes, apart from its balance of trade, other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly.
According to the IMF, from 2002, UAE's current account surplus has been on an upswing, reaching $7.6 billion in 2003, $10.3 billion in 2004, and more than doubling in 2005 at $24.3 billion, and reaching $35.9 billion in 2006, and $41.7 billion in 2007.
Over the medium term, it is expected that the current account position will continue to be in surplus, supported by expected strong performance of non-oil exports. This will lead to further accumulation of official foreign assets. During the period 2008-2012, it is expected that the current account surplus to average 18 per cent of GDP.
UAE external debt constitutes mostly foreign liabilities of UAE commercial banks and private institutions. It is estimated that the UAE foreign liabilities have almost tripled over the past two years. For the period 2008-2012, it is expected that UAE's external debt to average 61 per cent of the GDP. Presently, there are no signs of external debt vulnerability associated with such borrowing given that UAE external position is a net creditor (i.e. foreign liabilities are more than offset by UAE foreign assets), but it would need to be monitored.
In 2007, UAE's current account balance —the sum of the balance of trade (exports minus imports of goods and services), net factor incomes (such as interest and dividends) and net transfer payments (such as foreign aid) — rose by 16 per cent to $41.7 billion from $35.9 billion in 2006. The surge in the current account balance is driven by a record jump in exports of goods and services, analysts said.
According to the latest findings by the IMF, in 2008, the UAE's balance of trade will swell by $27.3 billion to $72.5 billion. In 2007, the country recorded a balance of trade of $45.2 billion, and in 2006 it was $38.7 billion. IMF's latest statistics projects UAE's exports of good and services to reach $206.5 billion in 2008 from $165.7 billion in 2007, while imports to grow from $120.5 billion in 2007 to $134 billion in 2008.
With a predicted 58 per cent growth this year, the current account balance will account for 27.5 per cent of the country's GDP in 2008. In 2007, current account balance accounted for 21.6 per cent of the GDP. According to IMF projections,
UAE's nominal GDP is expected to surge 24.5 per cent from $192.6 billion to $239.9 billion in 2008.
The upbeat current account surplus outlook given by the IMF is contrary to the forecast made by Oxford Economics, a world-leader in economic forecasting. According to Oxford Economics, despite the pick-up in UAE's non-oil revenues as the economy continues to diversify, the country's current account surplus is poised to decline to about 7.5 per cent of GDP in 2008 and to 3.5 per cent in 2009.
A country's current account includes, apart from its balance of trade, other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly.
According to the IMF, from 2002, UAE's current account surplus has been on an upswing, reaching $7.6 billion in 2003, $10.3 billion in 2004, and more than doubling in 2005 at $24.3 billion, and reaching $35.9 billion in 2006, and $41.7 billion in 2007.
Over the medium term, it is expected that the current account position will continue to be in surplus, supported by expected strong performance of non-oil exports. This will lead to further accumulation of official foreign assets. During the period 2008-2012, it is expected that the current account surplus to average 18 per cent of GDP.
UAE external debt constitutes mostly foreign liabilities of UAE commercial banks and private institutions. It is estimated that the UAE foreign liabilities have almost tripled over the past two years. For the period 2008-2012, it is expected that UAE's external debt to average 61 per cent of the GDP. Presently, there are no signs of external debt vulnerability associated with such borrowing given that UAE external position is a net creditor (i.e. foreign liabilities are more than offset by UAE foreign assets), but it would need to be monitored.
/KhaleejTimes/
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