The United Arab Emirates will see higher-than-expected 4 per cent growth in 2012, its Central Bank said this week, spurred by strong growth in both Dubai and Abu Dhabi, and an increase in public spending and oil prices.
The bank's Financial Stability Review predicts 4 per cent growth for the UAE's two major emirates this year, contributing to overall growth expectations significantly higher than those made by the International Monetary Fund (IMF).
Both the Central Bank and the IMF predict inflation to remain an annual 1.5 per cent.
The Central Bank's optimistic forecast follows several years of economic difficulties for the UAE.
In 2009, the economy contracted 4.8 per cent, after a crisis in the real estate and manufacturing sectors was followed by declines in oil and gas production and global trade.
The UAE's economy picked up in 2010, climbing 1.3 per cent. It performed even better last year, expanding 4.2 per cent after a 6.7 per cent boost in oil and gas revenues.
Inflation in the UAE also dipped into negative figures in 2009. It has climbed in the two years since, registering 0.2 per cent in 2011, as a 4.9 per cent fall in house prices was offset by a 7.8 per cent rise in food.