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Small Cap5,129 0.41
Micro Cap8,650 0.61

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UAE Economic Digest - Sep 09

Source: Kuwait & Middle East Financial Investment Co. - KMEFI

GDP on production side

Looking at UAE's GDP main constituents (table above), the top two heaviest sectors are Oil and Wholesale retail trade which combined make up more than 50% of total nominal GDP. Moving down in the list, joint with the latter two sectors, the manufacturing and real estate sectors would increase the share up to 70%. The detrimental gap between real GDP & nominal GDP indicates that the economy experienced inflationary and high growth profile like most of the GCC economies that witnessed booming prices due to peaking unprecedented levels of oil prices which upward trend was sharply interrupted by the global financial crisis.

According to the IMF's latest projections, the real value of UAE's GDP might not change significantly in 09 whereas the nominal GDP could possibly contract by 15% to AED 796 billion from AED 934 billion in 08. On the other hand, in 2011, nominal GDP will start recovering to grow from AED 947.5 billion yet again (chart right above). Furthermore, Real oil GDP is expected to shrink by 5.3% while non-oil GDP would stands at 0.8% growth in 09. However, in 2010, a rebound in oil & non-oil sectors is foreseen with signs of positive growth rates. In general, should prices and wages be monitored closely to adjust with short-term GDP contractions, the outlook of GDP setting sounds stable in 09. Add to that, applying cautious fiscal and monetary policies by the government and the Central Bank will help the economy encompass the crisis aftermath and maintain a stable less painful outlook.

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