[ad_1]
Global inflation is expected to peak at 9.2% in the third quarter of 2022 and decline throughout the year
Despite the challenging global environment, the UAE government has implemented various effective measures to curb inflation in the country.
The UAE and Gulf Cooperation Council (GCC) countries will show resilience and continue to control prices of essential goods through vigilant policy measures as inflation has become a major concern for major economic powers, experts said.
In its latest Global Economic Outlook report, FocusEconomics said it expects the highest inflation rates this year in Eastern Europe, the Middle East, sub-Saharan Africa and Latin America.
Global inflation is expected to peak at 9.2% in the third quarter of 2022 and should decline throughout the year, the economic consultancy said.
The report cited the war in Ukraine, Western sanctions on Russia, OPEC’s oil production decisions and Black Sea grains as some of the main risks to global inflation.
Higher Rent Trade-off
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said inflation should remain moderate this year, especially in the UAE, where prices have strengthened significantly this year.
“Weaker inflation in the UAE will be helped by energy prices, especially from a high base in the second quarter. However, we see higher rental prices continuing to filter into inflation in the UAE,” Malik told harrij times Sunday.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said inflation should remain moderate this year, especially in the UAE.
Global inflation has also peaked and should remain modest this year, she said.
“Similarly, energy and food should drive softer global inflation, with a weaker growth backdrop and tighter financial conditions. However, even with the dovish outlook, inflation is expected to remain well above the comfort zones of many major central banks. As a result, we expect 2023 Further policy tightening, including from the Fed. Tight labor markets are a key theme globally,” Malik said.
In response to a question about keeping inflation in check, she said a sharp rise in global interest rates would lead to weaker inflation in 2023, while energy prices were well below their 2022 peaks.
“A big reason behind further rate hikes globally is to stop inflation expectations from becoming entrenched,” she said.
UAE inflation under control
Saad Maniar, senior partner at Crowe UAE, said that despite the challenging global environment, the UAE government has taken various effective measures to curb inflation in the country.
“The government is seeking to reduce inflation this year, which is just over five per cent. Inflation is already in line with global trends and is expected to moderate gradually, including as a result of tightening financial conditions,” Maniar told harrij times Sunday.
Saad Maniar, senior partner at Crowe UAE, said the UAE government has taken various effective measures to curb inflation in the country.
Regarding inflation in the region, he said that inflation in the GCC is expected to reach around 2.6 percent in 2023 and stabilize at around 2 percent in the medium term.
“Price pressures peak in 2022 and inflation starts to fall in the GCC economies,” he said.
On the question of how to curb inflation, he said higher interest rates will help reduce inflation, but will also weaken economic growth. In addition, the government should take drastic measures to control the money supply and improve economic efficiency and competitiveness.
More money chasing fewer goods
Atik Munshi, managing partner of FinExpertiza UAE, said that almost all countries in the world are currently facing some kind of inflationary pressure.
“Some countries like Turkey, Russia, Iran and even the US are facing high inflation; the GCC countries are doing relatively well in terms of inflation, but the GCC is also suffering,” Munshi told harrij times Sunday.
He said there are several drivers of inflation – the most common being more money chasing fewer goods.
Atik Munshi, managing partner of FinExpertiza UAE, said that almost all countries in the world are currently facing some kind of inflationary pressure.
“Inflation can happen because of demand pull, cost push, imported inflation or even inflation expectations. These factors can individually or together cause inflation,” he said.
“Since we are very dependent on imports, we also face imported inflation, which means inflation in another country will lead to higher prices in our country as imported goods will become more expensive for UAE consumers,” he said.
Munshi said the country’s monetary authorities and their central/reserve banks are trying to curb inflation through various measures.
“The UAE has also witnessed rising prices for items in the Consumer Price Index (CPI) bucket. As property valuations have risen, rent expectations have also risen. Rent is one of the main items in the CPI bucket (others include food, energy, transport , healthcare, etc.). Part of the problem, in addition to rising rents, is rising costs, which are breeding inflation,” he said.
Central banks typically raise interest rates to curb inflation, and through this measure, currencies become more expensive, he said.
“Central banks may also resort to raising bank reserve requirement ratios as a tool to control inflation. As there are many variables, no one approach is fully proven. Entities may face a smaller pressure,” he said.
Causes of Global Inflation
> high demand In the post-coronavirus era
> supply chain to interrupt
> end consume
> Excess printing money
> war in ukraine
> Rising food prices
> high energy rate
— muzaffarrizvi@khaleejtimes.com
[ad_2]
Source link