ABU DHABI // The UAE is firmly on the path to recovery and inflation is expected to be up to 3 per cent this year, the 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 per cent. In the aviation sector the growth has been about 10 per cent 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 his forecast last month for 1.3 per cent growth this year. The UAE central bank deputy chairman Omar bin Sulaiman said last week growth could exceed 4.5 per cent 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 per cent this year and growth of 2.4 per cent in 2010. Inflation, a big headache in the region in the previous years of oil and property-fuelled 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 per cent 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 per cent to 4 per cent in 2009, down from 12.3 per cent last year. He said on Monday consumer price growth was at around 2.6-2.9 per cent on average so far this year. UAE consumer prices fell 0.15 per cent on an annual basis in August, in a first decline since the ministry started providing monthly figures in June, mainly due to fall in food, clothing and rental costs.