Inflation hits UAE competitiveness
Surging inflation is denting the UAE’s global competitiveness, according to a survey released yesterday by the World Economic Forum.
The country ranks 37th in the Global Competitiveness Report 2007-08, the same position it held last year and below Saudi Arabia, Qatar and Bahrain.
Analysts at the World Economic Forum say the UAE is one of the Mena region’s most competitive economies with a flexible labour market and modern transport infrastructure. But they say rising inflation (9.7 per cent in 2006) and insufficient progress on economic reforms - a common factor in the region - is holding back its potential.
“Leaders in the region must seize the opportunity afforded by the windfall oil revenues, which provide a cushion for making the necessary reforms,” said Margareta Dzreniek Hanouz, senior economist responsible for Mena competitiveness research at the World Economic Forum.
“They must resist the temptation of allowing what may be a short-lived boon to lead to complacency.”
The United States tops the index, which bases countries’ rank on 12 main areas of competitiveness.
Highlighting the UAE’s economic strengths, the report said the country’s trade zones and institutions are considered transparent and free from corruption (ranked 12th in the index) and the business community considers government spending to be efficient.
The report said the government has stabilised the country’s macroeconomic environment and efficiently managed the inflow of liquidity from rising oil prices.
Yet inflation - resulting from the economic upswing, booming real-estate markets, increasing liquidity, and a falling dollar to which the dirham is pegged - has resulted in a nose dive on the macro-economy rating from seventh last year to 39th in the latest edition of the report.
Among other strengths, labour markets are judged to be flexible (12th), meaning it is relatively easy to hire and fire workers and wages can mostly be determined by supply and demand.
However, the availability of talent could be improved by increasing female participation (ranked 117th), the report hinted.
Analysts said the UAE’s educational system, in particular primary education, remains an area of concern and could undermine future growth, especially as jobs are needed for the growing local population.
The country ranks 118th for enrollment rate in primary education. Source
The country ranks 37th in the Global Competitiveness Report 2007-08, the same position it held last year and below Saudi Arabia, Qatar and Bahrain.
Analysts at the World Economic Forum say the UAE is one of the Mena region’s most competitive economies with a flexible labour market and modern transport infrastructure. But they say rising inflation (9.7 per cent in 2006) and insufficient progress on economic reforms - a common factor in the region - is holding back its potential.
“Leaders in the region must seize the opportunity afforded by the windfall oil revenues, which provide a cushion for making the necessary reforms,” said Margareta Dzreniek Hanouz, senior economist responsible for Mena competitiveness research at the World Economic Forum.
“They must resist the temptation of allowing what may be a short-lived boon to lead to complacency.”
The United States tops the index, which bases countries’ rank on 12 main areas of competitiveness.
Highlighting the UAE’s economic strengths, the report said the country’s trade zones and institutions are considered transparent and free from corruption (ranked 12th in the index) and the business community considers government spending to be efficient.
The report said the government has stabilised the country’s macroeconomic environment and efficiently managed the inflow of liquidity from rising oil prices.
Yet inflation - resulting from the economic upswing, booming real-estate markets, increasing liquidity, and a falling dollar to which the dirham is pegged - has resulted in a nose dive on the macro-economy rating from seventh last year to 39th in the latest edition of the report.
Among other strengths, labour markets are judged to be flexible (12th), meaning it is relatively easy to hire and fire workers and wages can mostly be determined by supply and demand.
However, the availability of talent could be improved by increasing female participation (ranked 117th), the report hinted.
Analysts said the UAE’s educational system, in particular primary education, remains an area of concern and could undermine future growth, especially as jobs are needed for the growing local population.
The country ranks 118th for enrollment rate in primary education. Source
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