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Sharjah’s GDP posts significant growth rate

United Arab Emirates: Thursday, October 23 - 2008 @ 15:46

This was apparent as the Government sector has grown its share of the emirate’s GDP from Dhs60.4bn in 2006 to Dhs68.4bn in 2007, making 13.2% growth.

The government sector is currently accounting for 17.87% of the overall GDP of the emirate. This fact indicates the followings:

- As the government services sector has the lion share in GDP, it is capable of acting as a corrective force for the economic growth and will show a proven quality performance in government services, gaining the necessary power to guide the economic sector to the desired direction.

- The emergence of government role in practicing the required corrective measures will support the state intervention without destabilizing market mechanism.

This will be implemented through prohibiting undesired activities and offering privileges to other desired activities to yield in raising the overall demand and increasing the GDP.

- The development of service sector and the rising contribution of government sector in the emirate GDP in 2007 act as a necessary buffer to absorb the effects of any regional or global crisis.

Sharjah’s GDP in 2007 can be summarized as follows:

Sharjah’s GDP (2004-2007):

1- economic growth rate 2007:
- The average annual GDP growth rate of the emirate in 2004-2007 was calculated at 41.7% according to local statistical data. It grew to Dhs68.4bn in 2007, from Dhs30.4bn in 2004.
- The overall GDP of the emirate was amounted to Dhs68.4bn in 2007, a13.2% growth as compared to figures of 2006, according to federal statistical data.

2- Structure of the local GDP according to sector:
A. Local GDP from Commodities Products:
2004 2005 2006 2007
13.6 24.7 27.7 29.6

- The share of commodities products sector (agriculture, Extractive industry, manufacturing industry, construction, electricity, gas and water) to GDP has grown from Dhs13.6bn in 2004 to Dhs24.7bn, Dhs27.7bn, and Dhs29.6bn in 2005, 2006 and 2007, respectively.

- The average annual growth rate of commodities products sector during the period from 2004 to 2007 was calculated at 39.3%. The manufacturing industry sector has the lion’s share to commodities products sector’s GDP, posting Dhs12.2bn in 2007, a 41.2% from the total GDP of the sector amounted to Dhs29.6bn.

B. Local GDP of Manufacturing Product Sector:
2004 2005 2006 2007
5.5 11.7 11.9 12.2

The manufacturing industry sector plays a leading role in generating growth, as this industry contributes to boosting economic stability due to its ability to provide a sustainable and renewable source of revenue and job opportunities.

The manufacturing industry increases the added value of the local revenues and represents an important source for transforming technology.

Analyzing the structure of the local GDP according to sector, the rising value of local GDP for manufacturing industries was noticeable.

It grew from Dhs5.5bn in 2004 to Dhs12.2bn in 2007, with 40.6% annual growth rate. The manufacturing industry accounted for 17.8% of the emirate’s overall GDP in 2007.

3. Intermediate Goods 2007:
Statistics made on the Intermediate Goods in Sharjah showed that manufacturing industry sector is the largest consumer of intermediate goods with 19.2%, followed by government services sector with 18.41%, construction sector 18.11% and real estate and business sector with 12.43%.

These figures highlight the maximum importance of four major industries which play vital roles in GDP, production and intermediate goods, these major industries are:

- Manufacturing industry.
- Government services sector.
- Construction sector.
- Real estate and business sector.

4. The Gross Capital Formation (GCF) in 2007.
The manufacturing industry has the highest added value in the Gross Capital Formation, accounting for 19.99% in 2007. Comparing the figures of 2006, we find that the emirate has solved the problem of declining share of manufacturing industry to the GCF, with an impressive growth of 79.3% from Dhs2015m to Dhs3613m in 2007.

This means the manufacturing industry sector has the highest share to gross capital formation in terms of both value and rate of contribution, a growth that proves an appropriate direction of the emirate’s economic policies in supporting this vital sector from one side and a keen interest shown by investors and private sector from the other side.

The data of gross capital formation for real estate and businessmen services sector showed much sensitivity of this sector to local and imported economic cycles. It showed instant effects from domestic and foreign inflation rates, liquidity crisis and consuming demand.

The average growth rate of the sector’s gross capital formation is stable despite the current global crunch, proving its ability to confront the global crisis as it accounted for 15.71% of the GCF which amounted to Dhs18076.

In conclusion we find that the basic foundations for the Sharjah’s economy and achieving the desired growth rates are:
- Manufacturing industry.
- Government services sector.
- Construction sector.
- Real estate and business sector.

These sectors proved their significant contribution to GDP and GCF and appeared as major consumer for intermediate goods.

The above report demonstrated the attractive economic situation in the emirate of Sharjah and the ability of this economy to continue sustainable economic growth.

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Thursday, October 23- 2008 @ 15:46 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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