UAE growth expected to slow to 2.7% as liquidity normalises

Dubai: Growth in the United Arab Emirates is expected to slow to 2.7 per cent in 2009 from an estimated 4.8 per cent in 2008.

Growth in Saudi Arabia is seen dropping to 2 per cent from 2.7 per cent, a bank report said on Friday.

"We expect liquidity conditions in the UAE to normalise into 2009, as most of the foreign inflows have already fled the country. However, we do not expect a return of the ample liquidity conditions we saw in the first half of 2008," Standard Chartered said.

"The UAE central bank aims to keep credit growth at around 10 per cent. If it achieves this, then the economy should begin to cool off, which should help bring inflation down to 8 per cent in 2009 from 12 per cent in 2008," the report said.

The bank said liquidity in Saudi Arabia was more than adequate and the economic slowdown in 2009 was expected to be moderate.

The UAE had felt the impact of the global financial crisis and reduction in liquidity more acutely than Saudi Arabia, it said.