UAE: Inflation to fall thanks to real estate market easing

The UAE's inflation rate is set to drop to four per cent during 2007 due to a projected easing of the real estate market, according to a senior government official. "We are considering that the prevailing relatively high inflation rate in the UAE is only temporary, as it is related to the current economic conditions," said Sultan Bin Naser Al Suwaidi, governor of the UAE Central Bank, according to Gulf News.

"The expansionary economic policy that is focusing on attracting foreign direct investments has resulted in an influx of foreigners adding pressure on the real estate market. However, with many units expected to be delivered by the end of this year in Dubai, and by the end of 2007 in Abu Dhabi, we expect the inflation rate to gradually retreat by the end of this year, and further by the end of 2007, to an estimated four per cent, as compared to our estimated eight per cent for 2005," he was quoted as saying.