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KHALEEJ TIMES, Saturday, Nov 9, 2019 | Rabi Al Awwal 12, 1441

Lower interest rates helping UAE cope up with subdued oil prices

Emirates: Lower interest rates are helping the UAE economy, which is expected to grow by 2.4 per cent this year, the central bank governor said on Sunday.

"It is positive for the economy coming from a lower oil price economy. This is positive for the economy that is reviving from the low oil prices," Mubarak Rashed Al Mansoori said while speaking at the UAE Banks Federation Middle East Banking Forum in Abu Dhabi.

Last week, the UAE cut interest rates by 25 basis points, following the US Federal Reserve.

"We expect the national economy to grow by 2.4 per cent in 2019, driven by faster growth in the non-oil sector," the governor said.

The UAE economy grew 1.7 per cent in 2018, according to central bank figures.

According to the central bank, non-oil GDP growth is estimated to have grown from 0.3 per cent in January-March 2019 quarter to 1.5 per cent in April-June quarter. However, oil GDP growth is estimated to have moderated from 12.4 per cent in first quarter of 2019 to 4 per cent in the second quarter.

"Credit growth has been 5 per cent on a year-on-year basis for the period ending September 2019. And deposit growth in the same period has been 4 per cent," Mansoori said.

About the anticipated economic growth for next year, Al Mansoori didn't give the exact figure but he said the results will be positive.

He said the real estate sector in the UAE is at an attractive level and that the demand for properties has increased this year, especially in Dubai.

No room for cryptos 

On the whether the country considers the adoption of the crypto currencies, the governor said the UAE is not supportive of that kind of mechanism because of the risks involved.

"We don't support the crypto currency. We can't trust our economy with such a system," said Al Mansoori, adding that recent reports have shown that some terrorist groups were hiding behind the system to conduct illegal activities.

This year's forum explored the most prevalent trends affecting the sector including fintech, Islamic finance and risk management whilst taking pace with technological innovation, financial crimes and automation.

Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation, said the banking sector as a whole has a responsibility to help grow and develop society.

"By better preparing banks for the future, we are securing a better future for the UAE and Middle East," he said.

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