DUBAI, Dec 31: Dubai’s economic growth rate eased to 16 percent in 2005, coming in just short of last year’s record as the key non-oil sector slowed significantly, official figures showed on Saturday.

The non-oil sector accounts for more than 94 per cent of the emirate’s economy, easily the most diversified in the oil-producing Gulf Arab region and is considered a model for its neighbours.

A large chunk of the Gulf’s record oil revenues over the past few years have been invested in Dubai, which saw its gross domestic product soar by a record 16.7 per cent in nominal terms last year.

This year’s growth rate fell just short at 16 per cent, said a statement from the economic development department in Dubai, the trade and tourism hub of the United Arab Emirates.

The oil-sector grew 18 percent in 2005 when petroleum prices repeatedly surged to new highs.

But the non-oil sector had a relatively poor year, growing 14.9 per cent compared to last year’s expansion of 20.7 per cent, according to figures in the statement.

None of the figures were adjusted for inflation. The central bank has forecast UAE inflation of up to 6.5 per cent in 2005, although analysts say it could easily be much higher in Dubai.

Gulf oil cash has poured into Dubai’s rapidly expanding retail and tourism sectors as well as its stock and property markets, although there are growing concerns that the real estate boom may be running out of steam.

Construction and real estate were easily fastest growing sectors of the economy last year but the economic development department did not give comparable figures for 2005.

Government initiatives (have) enabled a continuous inflow of foreign capital — a trend that is expected to be maintained..., the statement said.

Dubai has launched major infrastructure and tourism projects to lure foreign investment as the economy weans itself off dwindling crude oil reserves. Oil’s share of GDP has been falling in recent years and was largely flat in 2005.

The statement said the GDP of the emirate of over 1 million people would hit the 150 billion dirham ($40.8 billion) mark next year.

The rest of the UAE and other Gulf Arab states are trying to emulate Dubai’s success by ploughing oil revenues into lavish infrastructure, tourism and financial services. —Reuters