Dubai’s real GDP, which accounts for nearly a third of the UAE economy, is projected to grow by around 4.1 per cent in the first quarter of 2012 while inflation could remain as low as 1.5 per cent.
The forecasts by the Dubai Economic Council (DEC) showed the expected inflation in the first quarter of this year would be higher than in the same period of 2011, when it dipped to near zero.
“Real GDP growth will be around 4.1 per cent while inflation will be nearly 1.5 per cent…it will remain at that low level through the year because of the strengthening of the US dollar due to the EU debt crisis, as well as the emirate’s conservative policy towards liquidity growth,” DEC said in a statement carried by the Arabic language daily Emarat Alyoum.
It said the downturn in the real estate sector in the wake of the 2008 global financial distress was the main cause of lower inflation rates in the emirate since housing accounts for almost 40 per cent of the consumer price index.
The statement said inflation in the first quarter would be higher than in the same period of last year because of better GDP growth rates and consequently stronger domestic demand.
“In contrast with many economies in the region and other areas, Dubai has recorded an expansion in economic activity over the past two years,” DEC secretary general Hani Al Hamli said.
He said Dubai’s GDP shrank by around 2.4 per cent in 2009 before starting to recover in the following years, adding that all economic sectors have recorded recovery supported by growing liquidity in the emirate.