The weak oil price should help to contain inflationary pressure in the UAE this year, the economy minister said.
Sultan Al Mansouri expects inflation to hover at about 2.5 per cent this year as the slump in the oil price helps to lower the price of imports.
Inflation rose last year to 3.1 per cent, its second-highest level for five years, driven by surging house prices.
The minister's forecast of 2.5 per cent inflation is in line with estimates from the IMF.
“As long as we have around 2 and 2.5 per cent [inflation], that is controllable,” said Mr Al Mansouri on the sidelines of a conference in Sharjah on foreign direct investment. “The price of oil reflects on the price of imported goods also. It is definitely a benefit to the economy from the reduction of the prices of oil indirectly.”
Brent has more than halved since reaching about $115 a barrel in June because of a supply glut sparked largely by the US shale boom.
But Brent closed on Friday up 2.2 per cent at $57.80 a barrel, as a drop in the US rig counts indicated a slowdown in the US shale industry.
The UAE economy will post growth ranging from 4 to 4.5 per cent, depending on the level of oil prices this year, the minister reiterated. “Watching what is happening in the last few days in the area of prices of oil, I see some positiveness happening in that area,” said Mr Mansouri.
“I expect that [the drop in oil price] will energise the economies of China, Europe, America and so on, and the demand on oil will increase and eventually this wheel of the prices of oil will start to rise up, but not as much as it used to be.”
The UAE’s own forecast for economic growth this year is higher than IMF estimates. The IMF cut its 2015 UAE growth forecast, citing the effect of lower oil prices on Abu Dhabi’s energy sector. The UAE’s economy, it said, will grow by 3.5 per cent – 1 percentage point below the IMF’s October estimate.
Separately, the minister said the ministry is working on a new foreign direct investment (FDI) law that will help to boost FDI in the country. FDI rose 25 per cent to US$13 billion last year, he said.
dalsaadi@thenational.ae
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Killing of Qassem Suleimani
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
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Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
Farasan Boat: 128km Away from Anchorage
Director: Mowaffaq Alobaid
Stars: Abdulaziz Almadhi, Mohammed Al Akkasi, Ali Al Suhaibani
Rating: 4/5
Know your camel milk:
Flavour: Similar to goat’s milk, although less pungent. Vaguely sweet with a subtle, salty aftertaste.
Texture: Smooth and creamy, with a slightly thinner consistency than cow’s milk.
Use it: In your morning coffee, to add flavour to homemade ice cream and milk-heavy desserts, smoothies, spiced camel-milk hot chocolate.
Goes well with: chocolate and caramel, saffron, cardamom and cloves. Also works well with honey and dates.
