Inflation could slow UAE growth

Gulf economies could see an economic slowdown due to galloping inflation, particularly in the UAE and Qatar, an International Monetary Fund official told Gulf News.Mohsin Khan, director of the IMF’s Middle East and Central Asia department told the newspaper "The unprecedented economic boom driven by oil revenues and the recycling of regional liquidity has seen Gulf GDPs racing at a pace close to those of some of the East Asian countries. But inflation is becoming a major limiting factor.""In the UAE, inflation is estimated at above 10 per cent. However, this figure is for the whole of the UAE and for a city like Dubai the inflation rate could be much higher," he added.

The rising cost of living is creating pressure on wages, and a general escalation in all economic sectors, but particularly tourism, hospitality and financial services.The IMF says soaring house rents are a key driver of inflation. "New supplies of housing units will have some impact on rents and inflation, but not as much as the central banks would expect to happen," Khan said. Source