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BANKING

Oil lows hit UAE, Oman and Qatar

Middle East: Arab banks lay regional plans

Bahrain: diversifying away from oil

Saudi Arabia and Kuwait: closed-economy cousins


Although the federal government of the United Arab Emirates predicts 3.5% GDP growth this year most economic commentators expect growth of between 0% and 0.5%. Last year GDP dropped by some 5.5%.

Directly, oil constitutes about a third of GDP so the economy has suffered less from the drop in crude prices than elsewhere in the region. However, oil service companies in Dubai are now beginning to report a slowdown, suggesting that more pain is to come.

The federal budget will be inflationary, increasing spending over 1998's $5.8 billion. Revenue is projected to equal the 1998 figure, which seems optimistic. UAE statistics, covering seven emirates, are in any case notoriously difficult to interpret. There is income-sharing across the emirates but income from each one must be considered individually. The emirates' spending taken together exceeds the Federal budget. Comprehensive budgetary figures are never released.

The two most economically important emirates - Abu Dhabi and Dubai - are diversifying away from oil as rapidly as possible.


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