Economic growth in the UAE at a rate of 3 to 4 percent would be reasonable under the current circumstances, the country's central bank governor said on Wednesday.   

The UAE economy ministry sees GDP growth of 2.0-3.2 percent in 2010 based on oil price projections of $75-85 a barrel.   

Analysts polled by Reuters last month slightly improved their forecast for economic growth in the UAE this year after concerns over debt restructuring in Dubai eased.   

GDP growth was seen at 2.4 percent this year, up from 2.1 percent forecast in June.

'The UAE is a part of the global economy. The UAE (growth) will be reasonable under the circumstances, something between 3 to 4 percent,' Sultan Nasser Al-Suweidi.

'Deposits are coming to the UAE, and indeed to other GCC (Gulf Cooperation Council) countries at a higher rate, which puts pressure on the spreads,' he said.         

'One way liquidity could be enhanced is through requiring banks to hold ... (more) government papers.'    

'This requirement, however, presents some challenges as governments do not issue enough paper. A large effort should be exerted through governments ... in developing and emerging economies, and in countries such as the UAE to create such markets,' said Al-Suweidi.      

'One of the goals of the central bank is to maintain credit extension in the economy, growing at a reasonable rate.'    

On the UAE opting out of the Gulf monetary union, he said: 'The GCC has to learn from the European experience, it did not work as well.

Now, after the events in Europe they need to rethink, they need to reengineer. I think there are uncalculated risks.' - Reuters