DUBAI // The UAE central bank said the country's economy grew 7.4 per cent in 2008, due to high oil prices and measures taken by the bank to support liquidity in the banking sector from September last year. Inflation jumped to 12.3 per cent in 2008 from 11.1 per cent in 2007, as a result of property rental prices rising by 13.4 per cent, the central bank said on Saturday in its annual report. The UAE's money supply growth was up 29.1 per cent in 2008, reaching Dh899.1 billion ($245 billion) by the end of 2008, compared with Dh696.2bn at the end of 2007.
M3 is the broadest measure of money circulating in the UAE economy and an indicator of future inflation. "These developments indicate a contraction in monetary liquidity in the banking sector due to the lack of liquidity in the global markets, after the exit of speculative money that entered the country in the second half of 2007 and the first quarter of 2008," the report said. This is evident in the investment balance of banks operating in the country as shown in deposit certificates issued by the central bank which dropped to Dh47.1bn at the end of December 2008. The bank did not give a comparative figure for the same period last year.
The trade balance surplus increased by 35.3 per cent to Dh231.09bn in 2008, from Dh170.85bn in 2007. The current balance account surplus was also up 13.4 per cent to Dh81.82 in 2008 from Dh72.13bn in 2007. The bank attributed the increase to a 33.9 per cent rise in the value of total exports and re-exports to Dh878.51bn in 2008. Crude oil exports rose 39.7 per cent in 2008 to Dh313.74bn, due to the increase in crude prices globally and a rise in production. The benchmark stock index saw fluctuations throughout the first half of 2008, followed by a sharp drop of 21.2 per cent in the third quarter and 46.2 per cent in the last quarter.
Market capitalisation dropped to Dh363.9bn at the end of December 2008, from Dh844.5bn end of June 2008. *Reuters