The UAE's growth rate will remain "low" in 2010, but will still be better than that in 2009, Central Bank Governor Sultan Bin Nasser Al Suwaidi has said.
In the first high-level official response to the International Monetary Fund's (IMF) revision of the country's economic forecast last month, Al Suwaidi said, "We do not contradict their prediction. But the IMF changes their forecasts from time to time".
Addressing a press conference in the UAE capital of Abu Dhabi, Al Suwaidi reiterated that banks are not in need of more liquidity in order to spur lending activity, but said the UAE still faces "lingering effects" of the global financial crisis.
The IMF report lowered its 2010 GDP growth forecast for the UAE from 2.4 per cent to between 0 and 1 per cent, citing continued instability in the Dubai real estate sector.
The fund said its calculations show the UAE economy contracted by 0.7 per cent in 2009 compared to an earlier projection of -0.2 per cent.
The IMF criticised the low level of transparency in government decision-making, but credited the steps taken by the Central Bank which pumped Dh70 billion into the banking sector, guaranteed deposits and lowered interest rates, helping the country avoid a bigger slump.
Investment bank projections for growth this year have hovered around 2 per cent.
The Ministry of Economy maintains it expects growth to reach 3.2 per cent, Al Suwaidi said.
Loans and advances grew by just 2.4 per cent in 2009 to Dh1.02 trillion, according to Central Bank data, after sustaining over 30 per cent growth since 2005 and nearing 40 per cent in 2008.
"(Loan growth in 2009) is a true reflection of demand," he said.
