Minister sees inflation moderating as UAE outlook remains strong – News

Dubai’s annual inflation rises to 4.9% in February

Mohammad bin Hadi Al-Husseini, Minister of State for Financial Affairs, spoke at the meeting. – Photos provided

The outlook for the UAE’s economy remains strong, with growth expected to reach 3.9 percent by 2023, while inflation is expected to slow to 3.2 percent by the end of the year, down from 4.8 percent last year, Mohammad bin Hadi Al Hussein said. Minister of State Fiscal Affairs Mohamed bin Hadi Al Hussaini said.

Ministers attending a meeting of Middle East, North Africa, Afghanistan and Pakistan (Menap) regional finance ministers, central bank governors and heads of regional financial institutions in Washington said the fall in inflation will be driven by stabilizing prices globally and fading imported inflation , while locally, rents and wages are expected to drive the trend.

Fitch warned that sticky inflation in the UAE will start to ease but will continue to weigh on spending through 2023.

Fitch analysts expect real household spending in the UAE to grow by 4.0% in 2023, unchanged from 2022. They said the increase was largely due to tighter monetary policy and slower growth in real household spending due to higher domestic fuel prices, rising rents and strong demand-side pressures in 2022.

Dubai’s annual inflation rate rose to 4.9% in February as food and beverage costs rose, the latest figures from the Dubai Statistics Center showed. Dubai’s consumer price index rose 0.32% in February from 4.58% in January.

Food and beverage prices in Dubai rose 6.29 percent in February, while prices for housing, water, electricity, gas and other fuels soared 4.87 percent.

Analysts said the rise in inflation was also due to increases in prices for food and accommodation services, as well as insurance and financial services, which rose by 4.47 percent and 5.41 percent, respectively.

Speaking at a Menap meeting chaired by IMF Managing Director Kristalina Georgieva, Minister Al Hussaini noted that despite the economic resilience shown by the UAE and the wider region, many countries in the region still face global challenges. The risk of heightened certainty, as highlighted in the IMF background note, which highlights the need for regional collaborative efforts and cooperation with the IMF. “This is to accelerate efforts to promote fiscal sustainability and address debt vulnerabilities, which remain a key issue with the potential to have long-term implications for fiscal balances and undermine structural development plans,” he said.

The UAE minister praised the IMF’s view of using fiscal policy to counter inflationary pressures and promote economic stability in the region. “The persistence of current economic challenges will continue to lead to trade-offs between debt sustainability and longer-term sustainable development goals.”

The IMF recently forecast that the UAE’s economy would grow at a faster pace of 3.9% in 2024, compared with 3.5% this year, while cutting its 2023 forecast by 0.7% to 3.5% from 4.2% in October.

The UAE’s GDP is expected to grow by 4.1% in 2023, a forecast higher than the 3.9% forecast by the UAE Central Bank in its latest quarterly economic review, a senior World Bank official said.

“Despite the difficult global economic situation, our estimates suggest that the UAE economy will grow by about 4.1 percent next year, benefiting greatly from a strong recovery in the non-oil economy,” said World Bank Regional Director Essam Abu Suleiman. Gulf Cooperation Council.

The UAE Central Bank expects the country’s economy to grow by 4.3% in 2024, up from an estimated 3.9% this year, with Moody’s forecasting that growth will slow to 4.0% due to a modest contraction in oil production. OPEC and its partners.

The regulator maintained its growth forecast for this year at 3.9 percent, and expects the non-oil economy to grow 4.6 percent next year and oil gross domestic product to grow 3.5 percent.