Dubai Not As Affected By Inflation As Other Markets
22nd March 2022
With inflation adding economic pressures globally, Dubai is boasting that it is not currently as affected as many other markets.
Global markets are experiencing soaring food and energy prices alongside supplies shortages as a result of a combination of factors including recovering from the pandemic, the Russian invasion of Ukraine, the US Fed interest rate hike for the first time since 2018, and the increase in oil prices to over $100/barrel which haven’t been seen since 2014.
So how is Dubai sheltered from these inflationary pressures?
Having it’s currency pegged to the US Dollar helps to control inflation and reduce the volatility of it’s oil exports as oil is traded in dollars. This also helps the UAE to maintain economic stability which in turn provides confidence for foreign investors.
Dubai has put a strong emphasis on diversifying its economy. It is now focusing its efforts on growing certain sectors, including manufacturing, technology and finance. However, it is able to pivot it’s focus should a certain sector get hit by a shock.
According to Helal Al Marri of Dubai’s Department of Economy and Tourism, Dubai has a diversified source strategy and can take advantage of its location, where East meets West, and has strong air and sea links, to tap into different supply sources as and when needed. In fact, Dubai sees itself as a key player in the global supply chain recovery.
Inflation in the UAE is forecast by the IMF to increase 2.2% this year.
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Written by Jenny Hunt, Founding Partner & Strategic Advisor to the Gateway Group of Companies, Abu Dhabi & Dubai UAE
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