By Andy Sambidge
International Monetary Fund says falling property rents set to keep inflation rate in check this year
Falling property rents are set to keep the UAE's inflation rate at 4.5 percent in 2011, the International Monetary Fund said on Monday.
The IMF said in a statement that stronger tourism, logistics and trade would drive economic growth in the country from 2.1 percent last year to 3.3 percent this year.
"The economic recovery in the UAE is gaining strength, supported by a favourable global environment but subject to increased regional uncertainty," the IMF added.
It added that higher oil prices are also would also contribute to a "marked improvement in the fiscal and external positions".
At 4.2 percent, the IMF said the UAE’s unemployment rate was low, although unemployment among nationals remained high at 14 percent, and was concentrated in the northern emirates.
However, it said that in the short-term, the real estate overhang and refinancing needs from overleveraged GREs (government related entities) would continue to weigh.
"The authorities’ response to the unfolding events in the region is appropriate. Improved infrastructure in the northern emirates will help raise the standards of living in these areas," a report by the IMF's executive directors added.