Egyptian investment bank EFG-Hermes has revised its forecast for real GDP growth in the UAE in 2010 from 4.3 per cent to 2.9 per cent, following the announcement that Dubai World needed to restructure its debts.

The bank says that based on assumptions of weaker private sector consumption and slow credit growth, non-oil GDP growth would increase by only 2.7 per cent, down from the previous forecast of 3.6 per cent.

The last forecasts were published on 13 November, when the bank increased its outlook for the UAE based on higher than expected oil prices.

The International Monetary Fund is also revising its forecast for UAE growth levels in 2010 to “significantly lower” than the 3 per cent it had forecast in October.

“We revised down our non-oil and subsequently our overall real GDP growth forecasts for 2010, following the announcement at the end of November that Dubai World was seeking a credit standstill agreement for its debt repayment,” says the bank.

Growth in 2010 will be driven by the rising oil price and production levels, says EFG-Hermes. Dubai property prices would continue to experience “further downward pressure”.