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Abu Dhabi: Strong oil prices have brought a fresh econ-omic and fiscal boom to the UAE and other members of the six-nation Gulf Cooperation Council, but the upsurge has also triggered inflation despite government counter-measures, according to a UN organisation covering the Middle East. However, experts say the economic boom due to high oil prices means incomes are growing faster than price rises and policymakers are working towards curbing inflation. The real gross domestic product in the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman jumped by 8.7 per cent in 2003. It stood at 7.2 per cent in 2004 and 6.9 per cent in 2005, one of the highest growth rates in the world.
Growth will remain as high as 5.8 per cent in 2006 but most members are paying in terms of high inflation rates. This is due to a surge in the prices of many consumer items fuelled by strong domestic demand caused by high growth in key sectors, the Economic and Social Commission for Western Asia (ESCWA) said in a report. "The combined inflation average in the six members, which sit atop 45 per cent of the world's oil, was as low as 0.8 per cent in 2002 but swelled to 1.3 per cent in 2003, to around 1.8 per cent in 2004 and as high as 2.7 per cent in 2005. The rate is projected to climb down to around two per cent in 2006," the report said. Breakdown From 2.2 per cent in 2002, the average inflation rate in the whole ESCWA region increased to 2.9 per cent in 2003, to 4.6 per cent in 2004 and 3.9 per cent in 2005. The rate is expected to be around 3.8 per cent this year. A breakdown showed Qatar had the highest inflation rate in the GCC in 2005, standing at 8.8 per cent. It was put at 5.4 per cent in the UAE, 4.2 per cent in Kuwait, 3.3 per cent in Bahrain, 1.9 per cent in Oman and 0.7 per cent in Saudi Arabia. In 2006, the UAE is projected to have the highest inflation rate of 4.5 per cent. It is forecast at about 2.7 per cent in Qatar, 1.8 per cent in Kuwait, 1.6 per cent in Bahrain, 1.1 per cent in Oman and 1.0 per cent in Saudi Arabia. As for real GDP, the UAE recorded the highest growth of 8.0 per cent in 2005 while it stood at 7.6 per cent in Qatar, 6.8 per cent in Saudi Arabia, 6.5 per cent in Kuwait, 6.2 per cent in Bahrain, and 4.2 per cent in Oman, the report showed. "Economic growth, boosted by the remarkable growth in new and traditional economic sectors and the increase in international oil prices, is creating larger demand for goods and services than in the past; this additional demand has driven prices up," an Abu Dhabi-based economist told Gulf News. Gulf News earlier reported an estimated inflation rate of 6 to 8 per cent, although unofficial estimates are much higher.
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