ID :
20579
Mon, 09/22/2008 - 13:26
Auther :
Shortlink :
https://oananews.org//node/20579
The shortlink copeid
'Inflation rate to come down to 7% in 2010'
The UAE's inflation rate will fall from last year's 11.1 per cent level to seven per cent in 2010, says a new report according to a report in ‘Emirates Business.’
Inflation is expected to rise to 12 per cent by the end of this year before dropping to eight per cent in 2009, says the monthly Analysis of Economic and Financial Developments study by Standard Chartered Global Focus.
The country's gross domestic product is forecast to grow by 6.5 this year, six per cent in 2009 and 6.4 per cent in 2010.
Standard Chartered says the Middle East will be affected by the global slowdown and the fall in oil prices but the region is likely to outperform Western economies as investment in infrastructure continues.
"Budgeted oil prices are on average around US$45 to US$50 per barrel –anything above this level is simply a windfall gain," said Gerald Lyons, Chief Economist and Group Head of Global Research. "Inflation, including asset price inflation, is the main concern, and given the likelihood of an eventual correction we need to be aware of counterparty risk given the exposure of other banks to this sector."
He said the region should perform well as it continued to diversify and benefit from massive official reserves and sovereign wealth funds.
Turning to Africa, Lyons said the continent's economic outlook for 2009 was for high inflation to persist, currency volatility to re-emerge following years of trend appreciation and growth to be slightly more subdued as consumption and public investment trends weaken.
"Growth will slow because of the policy response put in place to counter higher food and fuel prices in 2008. Single-digit inflation will not be achieved either this year or next."
Lyons said Asian currencies were likely to weaken following China's decision to cut interest rates on September 15.
"Perhaps the rate cut by the Chinese was a sign that they did not want their currency to appreciate. If so it would not only fit in with their domestic policy needs but also would fit in with our thinking that the outlook for Asian currencies is negative.
"Within this we see the Chinese yuan and the Hong Kong dollar as being stable and the yen firming as money is brought home, but we see other Asian currencies softening versus the dollar."
The report says the fast-moving nature of the current global financial crisis highlights the need to be on the guard and be aware of downside risks. It says the need for a more balanced world economy will have some bearing on emerging economies, particularly as their export markets slow.
"This will dampen export growth from Asia. Also recent events have dampened the growth of commodity prices and oil prices, which in turn will impact African commodity exporters and Middle Eastern oil producers alike."
Standard Chartered says banks across South Korea, India and Thailand are likely to see more non-performing loans but at a level far below those seen in previous crises.
"The retail portfolio has already shown signs of weakness. The small and medium enterprise sector is likely to bear the brunt, especially in South Korea and India. The banks are still robust from a capital perspective but are likely to slow given the reduced future credit off take.
"In the Middle East, especially in the UAE, asset quality is holding. The banks are likely to see a correction in growth due to tight liquidity situation both in the local currency and on the international funding front."
Inflation is expected to rise to 12 per cent by the end of this year before dropping to eight per cent in 2009, says the monthly Analysis of Economic and Financial Developments study by Standard Chartered Global Focus.
The country's gross domestic product is forecast to grow by 6.5 this year, six per cent in 2009 and 6.4 per cent in 2010.
Standard Chartered says the Middle East will be affected by the global slowdown and the fall in oil prices but the region is likely to outperform Western economies as investment in infrastructure continues.
"Budgeted oil prices are on average around US$45 to US$50 per barrel –anything above this level is simply a windfall gain," said Gerald Lyons, Chief Economist and Group Head of Global Research. "Inflation, including asset price inflation, is the main concern, and given the likelihood of an eventual correction we need to be aware of counterparty risk given the exposure of other banks to this sector."
He said the region should perform well as it continued to diversify and benefit from massive official reserves and sovereign wealth funds.
Turning to Africa, Lyons said the continent's economic outlook for 2009 was for high inflation to persist, currency volatility to re-emerge following years of trend appreciation and growth to be slightly more subdued as consumption and public investment trends weaken.
"Growth will slow because of the policy response put in place to counter higher food and fuel prices in 2008. Single-digit inflation will not be achieved either this year or next."
Lyons said Asian currencies were likely to weaken following China's decision to cut interest rates on September 15.
"Perhaps the rate cut by the Chinese was a sign that they did not want their currency to appreciate. If so it would not only fit in with their domestic policy needs but also would fit in with our thinking that the outlook for Asian currencies is negative.
"Within this we see the Chinese yuan and the Hong Kong dollar as being stable and the yen firming as money is brought home, but we see other Asian currencies softening versus the dollar."
The report says the fast-moving nature of the current global financial crisis highlights the need to be on the guard and be aware of downside risks. It says the need for a more balanced world economy will have some bearing on emerging economies, particularly as their export markets slow.
"This will dampen export growth from Asia. Also recent events have dampened the growth of commodity prices and oil prices, which in turn will impact African commodity exporters and Middle Eastern oil producers alike."
Standard Chartered says banks across South Korea, India and Thailand are likely to see more non-performing loans but at a level far below those seen in previous crises.
"The retail portfolio has already shown signs of weakness. The small and medium enterprise sector is likely to bear the brunt, especially in South Korea and India. The banks are still robust from a capital perspective but are likely to slow given the reduced future credit off take.
"In the Middle East, especially in the UAE, asset quality is holding. The banks are likely to see a correction in growth due to tight liquidity situation both in the local currency and on the international funding front."
