The United Arab Emirates' economic growth is likely to slow to about 3 percent this year as it feels the effects of a sputtering global recovery, the Gulf federation's top economic official said Monday.
That would represent a slowdown from 4.2 percent growth in 2011, Minister of Economy Sultan bin Saeed al-Mansouri told reporters in the country's commercial hub, Dubai.
The seven-state UAE federation is the second largest Arab economy, after Saudi Arabia.
Al-Mansouri said he is less optimistic about growth in the Emirates this year because of its close links to the broader world economy, which is showing new signs of weakness.
"The world economy, with all respect to many regions of the world, is still not yet moving and coming out from the economic crisis," he said.
The International Monetary Fund forecast growth this year of 2.3 percent. Both the IMF and UAE figures are estimates.
The UAE is OPEC's third biggest oil producer, and it relies heavily on oil revenue to balance its budget and fuel its economy.
Al-Mansouri said he believes $100 is the "right price" for a barrel of oil.
"As long as it is hovering $100, we're on the safe side," he said. "My expectation is it will hover between $80-$100, depending on the world situation."
U.S. benchmark crude prices tumbled to eight-month lows below $82 a barrel Monday following the release of a disappointing U.S. jobs report last week. Prices for Brent crude oil have also dropped sharply to near $97 a barrel.
Besides being a key oil producer, the UAE is a major Middle East trading hub. Dubai is home to the region's busiest airport and sea port, and it has long been a transfer point for goods moving in and out of nearby Iran.
Al-Mansouri said tightening Western-led financial sanctions aimed at convincing Iran to scale back its disputed nuclear program are hurting UAE-based traders doing business with Iran.
The restrictions have made it increasingly difficult for banks to deal with Iran's financial system.
"Definitely the trade has been affected by that. You just go and talk to anyone from the trading community here, and they are complaining about that," he said.
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