The International Monetary Fund (IMF) said on Tuesday that record high inflation levels in the UAE and other GCC countries could be temporary as there were already signs of an easing in the price spiral in the wake of a dollar recovery.
In an exclusive interview with Khaleej Times, IMF’s director for the Middle East and Central Asia Mohsin Khan said with the US dollar gaining strength, there are signs that in some GCC countries the inflation was in fact slowing.
“While the depreciation of the dollar in recent years did contribute to inflationary pressures in the GCC, more important factors included supply bottlenecks, strong aggregate demand from infrastructure projects, and increases in international food prices. “To the extent that these factors are temporary, inflation is likely to be temporary.”
Asked if it was necessary that GCC countries abandon their dollar-peg to tame inflation as the greenback started to regain clout, Khan said: “With the dollar gaining strength, there is even less reason now for the countries to move off the peg.” He said a decision on the appropriate exchange rate regime should look at overall costs and benefits (not just inflation) over the medium term.
However, according to latest estimates by economists, inflation in the UAE would be headed for another record surge to cross 12 per cent this year despite serious efforts initiated by the Ministry of Economy to contain it at five per cent this year.
Inflation in the UAE rose to an all time high of 11.1 per cent in 2007. Inflation in Saudi Arabia accelerated to 11.1 per cent, its highest level in at least 30 years. – Khaleej Times
Abu Umar Says:
High inflation really hurts our pocket money. Hopefully its going down by early next year..
Dikisahkan dalam sebuah kitab karangan Imam Al-Ghazali bahawa pada suatu hari Nabi Isa a.s berjalan di hadapan seorang pemuda yang sedang menyiram air di kebun. Bila pemuda yang sedang menyiram air itu melihat kepada Nabi Isa a.s berada di hadapannya maka dia pun berkata, “Wahai Nabi Isa a.s, kamu mintalah dari Tuhanmu agar Dia memberi kepadaku seberat semut Jarrah cintaku kepada-Nya.”
