Bank says growth to slow from estimated 4.8% in 2008, Saudi growth to drop to 2%.
Growth in the United Arab Emirates is expected to slow to 2.7 percent in 2009 from an estimated 4.8 percent in 2008, while growth in Saudi Arabia is seen dropping to 2 percent from 2.7 percent, Standard Charteredsaid 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," the bank said in a report.
"The UAE Central Bank aims to keep credit growth at around 10 percent. If it achieves this, then the economy should begin to cool off, which should help bring inflation down to 8 percent in 2009 from 12 percent 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.
"The monetary policy transmission mechanism functions better in Saudi Arabia, and as a result, liquidity in Saudi has already normalised. Normalisation in the UAE will take longer, as the absence of monetary policy tools poses significant constraints," it said.