Inflation in the UAE climbed to a record high level in 2008 but the rate is projected to plunge in 2009 due to a sharp economic downturn, the National Bank of Abu Dhabi (Nbad) said yesterday.
The downturn comes after the gross domestic product surged by 6.1 per cent in real terms last year and the trade balance recorded its highest ever surplus, said Nbad Chairman Nasser Ahmed Al Suwaidi. In a foreword to the report about the bank's performance in 2008, Suwaidi said the UAE's fiscal balance also climbed to a record high level because of a sharp increase in the country's oil export revenues in 2008.
"A significant slowdown in economic activity is evident going forward…inflation is expected to have peaked in 2008 driven by higher food prices and rents. But it is expected to fall sharply in 2009," Suwaidi said.
He gave no figures on inflation in 2008 but the rate is projected to have peaked at around 13 per cent, the second highest in the GCC after Qatar.