Barclays: UAE experiencing deflation
Inflation will reverse from an average of 12.3 per cent in 2008 to -1.5 per cent in 2009, Barclays Capital said in a report. The decline in CPI inflation in the UAE is expected to increase in the second half of this year, it said in a report.Read it all.
In spite of the government's expansionary fiscal policy and liquidity injections, the mounting deflationary pressures are likely to stay till the end of the year, Barclays Capital said.
Continuing weakness in domestic demand, driven by a projected decline in population and falling wages, would be a key short-term driver.
Besides, sustained easing of food price pressures globally; and depressed real estate prices that should drive rental prices to even lower levels (notably in Dubai) would act as other factors contributing to the trend, the report said.