Dubai, May 6 (Xinhua-ANI): Oil prices retreated over 4.5 percent in the last four weeks, but the decrease does not change the perspective of the United Arab Emirates’ (UAE) economic growth of 2.6 percent in 2012, an expert with the National Bank of Abu Dhabi (NBAD) said Sunday.
Oil prices fell sharply on Friday to hit 98.5 U.S. dollars per barrel. The fall translated to a one-month loss of 4.5 percent.
Giyas Gokkent, Chief Economist and Head of Research at NBAD, told Xinhua in an interview that several factors are at play for the recent fall in oil prices.
“First, loose war talk has become more scarce as nuclear negotiations with Iran are underway. Second, Saudi Arabia was vocal against high oil prices and apparently tolerant of lower prices compared to current levels.
“Saudi Arabia, UAE, Kuwait are all producing at near record levels in part to mitigate any impact of Western sanctions surrounding Iran. Third, Eurozone slowdown translates to weaker global activity,” he said.
Regarding the impact of the decline on the UAE, home to some 7 percent of the world’s known oil reserves, Gokkent does not expect significant changes in the Gulf state’s economic perspectives.
“The recent decline in oil price has had no impact on our estimates because I was already assuming a lower oil price than the recent levels. UAE real GDP growth is forecast at 2.6 percent year-on-year in 2012,” Gokkent explained.
In 2011, the UAE economy grew by 3 percent amid constant high valuations of the black gold and because the politically stable Gulf country benefitted from the turmoil which hit some Arab countries by attracting more tourists, capital and new businesses.
“Overall growth is expected to be slower than in 2011 because a rise in oil production boosted 2011 figures and this is not expected to be repeated to the same degree in 2012, if at all. The current account balance is expected to register a surplus of 10.5 percent of GDP, while UAE fiscal balance is expected to register a surplus of 3.4 percent of GDP.”
In addition, Gokkent expects the sharp fall in oil end of last week to be of corrective nature, rather than a trend reversal.
“I am assuming an average oil price of about 105 U.S. dollars per barrel in 2012, roughly unchanged from 2011. I raised it to this level from about 100 U.S. dollars per barrel for 2012 about a month or two ago,” the Abu Dhabi based expert said. (Xinhua-ANI)