ABU DHABI: The United Arab Emirates (UAE) is firmly on the path to recovery and inflation is expected to be up to 3 percent this year, Economy Minister Sultan bin Saeed al-Mansouri said on Monday, lower than his previous forecast. The global credit crunch sent the top Gulf Arab economies – Saudi Arabia and the UAE – into a downturn this year but high state spending and a turnaround in oil prices are helping the world’s top oil-producing region get back on its feet.
When asked by Reuters whether the UAE is firmly on the path to recovery Mansouri said: “Yes, definitely at 100 percent. In the aviation sector the growth has been about 10 percent this year so far.”
He did not want to predict the rate of economic expansion in the world’s second-largest Arab economy next year, reiterating that his forecast last month for 1.3 percent growth this year.
The UAE central bank deputy chairman Omar bin Suleiman said last week growth could exceed 4.5 percent in 2010, adding he was not particularly worried about inflation following a shake-out in the property sector.
In September, the central bank governor said the economy could shrink or register a low growth rate in 2009. The International Monetary Fund expects contraction of 0.2 percent this year and growth of 2.4 percent in 2010.
Inflation, a big headache in the region in the previous years of oil and property-fueled boom, so far seems to be subdued in the world’s third largest oil exporter.
“My expectation is we will manage [inflation] between 2.5 to 3 percent this year,” Mansouri told Reuters on the sidelines of a conference.
Asked about the next year, he said: “We hope to control it unlike in the last few years.”
In September, Mansouri expected the annual inflation rate in the UAE to be around 3.5 percent to 4 percent in 2009, down from 12.3 percent last year.
He said on Monday consumer price growth was at around 2.6-2.9 percent on average so far this year.
UAE consumer prices fell 0.15 percent on an annual basis in August, in a first decline since the ministry started providing their monthly figures in June, mainly due to fall in food, clothing and rental costs. – Reuters
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