|
Dubai: There is "no single cure" for the problem of inflation in the region as each country has its own unique economic structure, Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said on Friday.
Rising inflation is "an expected product of our region's economic boom," the minister told the Arab Economic Forum in Beirut Lebanon.
Many economists have called for monetary reforms in the region because the dollar peg forces Gulf states to track Federal Reserve's interest rates.
The UAE Central Bank on Thursday reduced the rate at which banks borrow from it to two per cent from 2.5 per cent.
The move followed the Fed's lowering of its interest rate from 2.25 per cent to two per cent, the seventh US rate cut since September to boost money supply.
Critics of the dollar peg in the Gulf say interest rates in the region should be higher to tame high money supply, which is contributing to inflation.
"Inflation is disrupting the economic activities of some of the most progressive countries in the world. This phenomenon is an expected product of our region's economic boom; but is being compounded further by other factors such as globally rising food commodity prices, currency pegs, and excessive oil rates," Al Mansouri said, according to a ministry statement.
In tackling inflation, monetary and exchange rate tools have to be considered "with greater caution as they could trigger economic distortions," he said.
Latest available statistics peg inflation in Qatar at 13.7 per cent, about 11 per cent in the UAE and Oman, 9.6 per cent in Saudi Arabia, 9.5 per cent in Kuwait and 5.2 per cent in Bahrain.
Gulf countries have adopted price controls and wage increases, to lessen the impact of inflation on people. The UAE Ministry of Economy has signed agreements with key supermarkets to check prices of basic commodities.
Al Mansouri called on countries "to collaborate closely so that we can respond as a region to immediate issues" concerning inflation.
|
