Abu Dhabi to see inflation fall to 7% this year

Inflation in Abu Dhabi is expected to fall to seven percent or lower from a high of 11.5 percent in March last year, according to a government official.

The inflation slowdown would come as a result of a stronger dollar and declining property prices in the capital, helped by an oversupply of homes in neighouring Dubai, said Ahmad Ghaida, the director of economic planning at the Abu Dhabi Department of Economic Development.

Inflation for the full year “will be [a] single-digit number, not in the higher end,” he said on the sidelines of the UAE Global Investment Forum in Abu Dhabi, according to UAE daily The National.

Further declines would be seen in property prices and rents, he predicted, but added that this could have a negative impact on the expatriate workforce, many of whom worked in real estate related industries.    

“It is important to note that the slowdown we currently see in certain non-oil service sectors would slow the growth of the expatriate population, and hence the demand for housing,” he said.

However, a fall in the cost of living could see Abu Dhabi’s economy start to grow in the second half of the year, Ghaida added, in contrast to recent predictions that have warned of a contraction this year.

Furthermore the Abu Dhabi Government would most probably run a surplus this year, since its budgetary forecasts were based on a “much lower” oil price of $31 per barrel, he revealed.

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