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UAE registered substantial fall in inflation in 2009

ABU DHABI - The UAE registered a substantial fall in inflation in 2009, where the inflation rate dropped from 12.3 per cent in 2008, to 1.5 per cent, due to several reasons, including the drop in prices of oil, commodities and imports, according to the Annual Economic Report For the Emirate of Abu Dhabi 2010 which was released on Tuesday by Department of Economic Development.

“The global crisis led to a decline in global demand for most basic commodities, and lowered prices of construction materials, food and other goods and services.

The significant decline in rentals and housing costs contributed to reducing the rate of inflation in 2009, noting that this was one of major factors that led to hike rates of inflation considerably during the period 2007-2008, given that the relative weight of this factor in the consumer basket was more 40 per cent in some emirates in UAE, the report said.

“The foreign trade of theUAE grew increasingly in 2008, as a result of the rise in export values. A number of reasons led to that including: high oil prices, the rise in value of imported goods and services, due to the increasing economic activity in the UAE, and the global hike in prices of basic commodities, such as building materials and grains. This in turn, led to an increase in the volume of UAE foreign trade, the report added.

However, it said, in 2009 the volume of foreign trade decreased, due to the severe drop in prices of oil, basic commodities, which led to a decline in both exports and imports.

The National Statistics Center data shows that the size of the country’s exports in 2009, influenced by lower oil prices, which is the main item, in UAE’s exports, as it dropped from the $ 248.8 billion in 2008 to $ 209.6 billion in 2009. The rate of decline was about 15 per cent compared to a growth rate of 33 per cent in 2008.

This was expected due to the sharp drop in oil prices in global markets by more than 37 per cent in 2009. Imports also fell from $219.7 billion in 2008 to $193.5 billion in 2009, at a rate of decline reaching 12 per cent.

The fall in exports, which exceeded the rate of decline in imports, resulted in the drop of the balance of trade surplus from $29.1 billion in 2008 to $16.1 billion in 2009.

The trade surplus as a percentage of GDP also fell from 11.4 per cent in 2008 to 6.4 per cent in 2009.