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Hydrocarbon accounts for only 25% of country's GDP and 20% of exports.


The UAE economy is one of the most diversified among the GCC countries and will post 3.1 per cent gross domestic product (GDP) growth this year despite lower oil prices, according to an expert.

Julien Marcilly, chief economist, Coface, said the UAE's hydrocarbon revenues account only for 25 per cent of GDP and 20 per cent of total export revenues.

"More than 60 per cent of the country's budget revenues still depend on non-oil sector development," Marcilly said at Coface Country Risk conference in Dubai on Tuesday.

The conference, held as part of the sixth Global Trade Development Week, discussed the impact of low oil prices, economic diversification and greater integration with global trade in the region's economy.

High-level representatives from government, industry and international organisations attending the event also highlighted the importance of economic diversification, increased global trade and foreign assets for GCC countries.

According to Coface, GCC countries are expected to grow by 3.2 per cent in 2015 and 3.1 per cent in 2016, higher than many emerging and advanced economies. Saudi Arabia is expected to grow by 2.5 per cent.

"Though the GCC economies are still dependent on the hydrocarbon sector as its main export and source of fiscal revenues, in the past decade, respective governments have decided to replace their growth model by economic diversification that aims to reduce dependence on hydrocarbon, where prices are volatile and can be a source of macroeconomic imbalances," Marcilly said.

Although the forecast 2015 rates can still be considered high compared with many emerging and advanced economies, they remain below the region's average growth rate of 5.8 per cent between 2000 and 2011. The main reason for this slowdown is the decline in oil prices.

Rising government spending, coupled with falling oil prices, may transform the region's budget surplus of around 10 per cent in 2013 into a significant deficit in 2015. The same situation applies to current account balances. It is estimated that the current account surplus will dip from around 20 per cent of the region's GDP in 2013, to close to zero per cent in 2015.

Massimo Falcioni, head of Middle East countries at Coface, said more resilient economies benefit from strong macro-economic fundamentals such as more diversification, solid financial buffers and greater integration with world trade.

"The pace of growth of private consumption expenditure and governments' efforts to support sustainable economic growth are helping to keep the outlook positive," Falcioni said.

Mohammed Al Kamali, deputy CEO, Dubai Exports, said the conference allows SMEs to understand the market of the countries to which they are currently exporting and which they are looking to enter. "Through this knowledge, they will be better prepared to capitalise on opportunities."

Dr Ashraf Mahate, head of market intelligence at Dubai Exports, who spoke on the Africa segment of the conference, said the continent is an amazing opportunity for companies to expand their businesses in a market that is rapidly growing and becoming more urbanised. Africa is also expected to have more than half a billion middle class people by 2030.