Crucial year on horizon for UAE's economy

Next year will be critical for the UAE economy and the Government will need to take extra care as it navigates the world financial crisis, said Sultan bin Saeed al Mansouri, the Minister of Economy. After announcing the ministry's strategic plan for the next three years in Dubai yesterday, Mr Mansouri said the Government would emphasise further development of the industrial sector.

"This situation that arose recently gave us more confidence that industry is going to play a major role in the UAE economy," he said. "Industry might be a little bit difficult to develop, but it is something that creates confidence in the economy. It is something that you can trust." The industrial sector - including oil and gas - contributes 27 per cent of the country's gross domestic product, he said.

Several branches of the Government, including the Ministry of Finance, the Ministry of Economy and the Central Bank, have formed a committee to deal with the financial crisis. "This committee is working day and night on all concerns that might arise," he said. "It is very important to highlight that the situation is alive, not ending. The Ministry of Economy will communicate directly with different sectors of the economy, including finance, industry, trade, tourism and construction."

So far the Government has pledged Dh120 billion (US$32.67bn) for local banks in an attempt to ease a credit shortage that has threatened to slow property and infrastructure projects. Mr Mansouri said he expected the Government to inject the next instalment of the Dh120bn into local banks soon, and that consumers would see increased access to credit in the first quarter of next year. The country has largely avoided most of the fallout from the global economic storm. However, local banks have begun to tighten lending criteria because of a worldwide shortage of cash.

Governments across the Gulf are taking steps to shield their economies from the effects of the global turmoil. Yesterday, Kuwait's central bank governor called for the creation of a stabilisation fund for the country. The UAE Central Bank announced last week that it was discussing the possibility of new facilities to support property lending. [e-mail] [e-mail]