UAE's inflation rate is expected to rise to an average 5 percent in the next two years as imports continue to increase from East Asia where strengthening currencies may translate to higher prices, reported the English daily Gulf News Sunday.
The daily added that a forecast by the Economist Intelligence Unit (EIU) indicated that the economic turnaround is expected to result in inflationary pressures.
"Considering the sketchy nature of published financial data for the UAE, it is difficult to forecast inflation rates, with bankers unofficially estimating the real rate at 4 to 6 percent," said the forecast.
"The EIU believes the resumption of growth will increase the demand for imports from East Asia, where currency rates have risen, causing upward pressure on prices. Overall, we expect the rate of inflation to rise slightly, to an average of 5 percent per year in 2000 to 2001," added the forecast.
According to the EIU forecast, the UAE's economy is expected to grow at a real rate of 4 percent this year although it will rise to 4.5 percent in 2001 as this year's high oil prices continue to make an impact.
The forecasts are considerably lower compared to the planning ministry's 6.9 percent, due to the recession in real estate and construction, said the daily - Albawaba.com
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