Abu Dhabi inflation to stabilise by 2009

Abu Dhabi: Inflation in Abu Dhabi will stabilise by the end of this year, despite robust economic growth, senior government officials revealed yesterday.

The Department of Planning and Economy (DPE) revealed that inflation in 2007 stood at 10.66 per cent as housing costs continue to burden residents.

"The reality is that the housing market is a function of economic growth, and as long as our development continues this market will keep flourishing," said Butti Ahmad Al Qubaisi, DPE's executive director for planning and statistics.

DPE released yesterday the first Economic and Social Report for 2008, and will continue the practice with another report early in 2009.

The report, which traces the Consumer Price Index for five years, also outlines the performance of the different economic and social sectors during the same period including real estate, industry, finance, education, and commerce.

"The inflationary pressures from the housing market will ease gradually with the introduction of more new units in the coming two to three years, and this will help to relieve the heavy burden of the overall inflation rate," said Akeel Sharif Foolathi, economic consultant in the department.

The average annual growth rate of the emirate's Gross Domestic Product (GDP) stood at 25.4 per cent during the past five years, and we expect to maintain this rate in the years to come," Al Qubaisi said.

Non-oil sectors

The growth recorded in the non-oil sector is evident from the emirate's trade balance, where non-oil exports and re-exports grew from Dh2.3 billion in 2002 to Dh11.4 billion in 2007, said the report.

"With the ongoing econ-omic growth, inflation can be inevitable, and hence we will work on containing it, and we hope that the efforts exerted by the federal minister of economy will yield fruit as well.

"But in any case there will be no more economic shocks in the future, this we can assure," Al Qubaisi said.

The increasing annual average selling price of oil is expected to ensure the flow of the necessary funds needed to transform the economy.

"Last year, the value of investments in the industrial sector amounted to Dh12 billion.

"We expect this number to grow further," said Dr Ahmad Zain Al Manawi, the economic expert at the department.

Growth in the agriculture and fisheries sector eased substantially by 12 per cent in 2007, with the number of farms falling from 23,704 in 2005 to 23,648 in 2007, according to the report.

Livestock production also fell as the sector continued to suffer from the increasing costs of feedstock, where the prices of corn ingredients increased by 80 per cent, barley by 184 per cent, and other ingredients by 39 per cent.

The overall added value of agriculture, fisheries, and livestock fell from Dh6.38 billion in 2002 to Dh4.36 billion in 2007.