Prices expected to fall 15% next year

Abu Dhabi: Steadily falling international oil prices and the global economic downturn will dampen the growth of the UAE economy next year, but on the other hand, domestic inflation will fall sharply and there will be a perceptible decline in the prices of consumer goods and services, economists told Gulf News on Tuesday.

Inflation

"Inflation will be down and consumer prices next year will likely come down by up to 15 per cent," said Mohammad Al Asoomi, a Dubai-based economist.

Other economists agreed.

Mohammad Amerah, an Abu Dhabi-based econ-omist, said if the oil prices on the international market continue to decline next year, the UAE's oil export revenue would dip sharply and this would reflect on the government's spending.

He said the average price of oil next year should be at least $50 (Dh183.5) a barrel for the government to be comfortable in terms of spending on infrastructure and other projects as oil exports are its main source of revenue.

"We will see some growth in the UAE economy next year, but it won't be as high as the previous years," Amerah added.

"If the government spending is going to decline, the growth in the country's gross domestic product (GDP) will also decline. The real estate sector, due to a lack of sufficient demand in the market, is also likely to be impacted negatively," he said.

UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi forecast on Monday that the growth of the country's GDP would fall to the low-single-digit level in 2009 due to the global financial crisis.

Facing challenges: Cooperation plan

The UAE Ministry of Economy is prioritising better integration with local government bodies to boost the nation's economic performance, and to help all emirates prepare for the challenges of the global financial crisis, Sultan Bin Saeed Al Mansouri, Minister of Economy, said on Tuesday.

Federal-local cooperation and integration is vital, the minister told a meeting of the General Managers of the UAE Chambers of Commerce in Dubai. Such integration will drive the development of stronger and more effective stimulus mechanisms for local economies, he added.

"Enhanced cooperation between the federal and local economic bodies is part of the Ministry's long-term strategy," Al Mansouri said. "This will help us discover and better prepare for the challenges of the global crisis."