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Sun 26 Jul 2009 02:01 PM

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UAE economy grew 7.4% in 2008

High oil prices and bank measures to support liquidity aided growth, according to UAE Central Bank data.

The UAE's central bank said the country's economy grew 7.4 percent in 2008, due to high oil prices and measures taken by the bank to support liquidity in the banking sector from September last year.

Inflation jumped to 12.3 percent in 2008 from 11.1 percent in 2007, as a result of property rental prices rising by 13.4 percent, the central bank said on Saturday in its annual report.

The UAE's money supply growth was up 29.1 percent in 2008, reaching AED899.1bn ($245bn) by the end of 2008, compared with AED696.2bn at the end of 2007.

M3 is the broadest measure of money circulating in the UAE economy and an indicator of future inflation.

"These developments indicate a contraction in monetary liquidity in the banking sector due to the lack of liquidity in the global markets, after the exit of speculative money that entered the country in the second half of 2007 and the first quarter of 2008," the report said.

This is evident in the investment balance of banks operating in the country -- as shown in deposit certificates issued by the central bank -- which dropped to AED47.1bn at the end of December 2008. The bank did not give a comparative figure for the same period last year.

The trade balance surplus increased by 35.3 percent to AED231.09bn in 2008, from AED170.85bn in 2007. The current balance account surplus was also up 13.4 percent to AED81.82bn in 2008 from AED72.13bn in 2007.

The bank attributed the increase to a 33.9 percent rise in the value of total exports and re-exports to AED878.51bn in 2008.

Crude oil exports rose 39.7 percent in 2008 to AED313.74bn, due to the increase in crude prices globally and a rise in production. The benchmark stock index saw fluctuations throughout the first half of 2008, followed by a sharp drop of 21.2 percent in the third quarter and 46.2 percent in the last quarter.

Market capitalisation dropped to AED363.9bn at the end of December 2008, from AED844.5bn end of June 2008. (Reuters)

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