DUBAI: Abu Dhabi consumer price inflation more than doubled in January as the UAE introduced a 5 percent value-added tax, with a weak real estate market preventing inflation from increasing even further, official data showed on Wednesday.
Annual inflation in Abu Dhabi, the biggest emirate in the UAE, jumped to 4.7 percent — the highest level since 2015 — from 2.0 percent in December, Abu Dhabi’s Department of Economic Development said.
The UAE’s imposition of VAT at the start of this year, designed to strengthen state finances in the face of low oil prices, was one of the biggest policy shifts in years; traditionally, Gulf governments have kept taxes to a minimum in order to attract investment and win favor among their citizens.
In a statement, the department described January’s higher inflation as “completely reasonable” given the new tax.
However, Abu Dhabi inflation could have increased much further without a weak real estate market. Residential rents sank 2.7 percent from a year earlier; rents and utilities have a 31.2 percent weight in the consumer basket, so a decline in those sectors offsets price rises for other goods and services.
Food and drink prices in January jumped 7.1 percent from a year earlier and transport prices increased 13.2 percent after recent hikes in gasoline prices.
Annual inflation in Dubai, the other large emirate in the UAE, rose more moderately in January, climbing to 2.7 percent from 1.5 percent in December, data released last month showed.
But falling house rents had an even bigger effect in restraining Dubai’s inflation, because housing and utilities account for 43.6 percent of the consumer basket there.
The UAE has not yet released nationwide inflation data and is expected to do so in the coming days or weeks. The International Monetary Fund has predicted average annual inflation in the UAE will climb to 2.9 percent this year from 2.1 percent in 2017.
Abu Dhabi inflation jumps with VAT introduction, but restrained by housing
Abu Dhabi inflation jumps with VAT introduction, but restrained by housing
Saudi investment pipeline active as reforms advance, says Pakistan minister
ALULA: Pakistan’s Finance Minister Mohammed Aurangzeb described Saudi Arabia as a “longstanding partner” and emphasized the importance of sustainable, mutually beneficial cooperation, particularly in key economic sectors.
Speaking to Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb said the relationship between Pakistan and Saudi Arabia remains resilient despite global geopolitical tensions.
“The Kingdom has been a longstanding partner of Pakistan for the longest time, and we are very grateful for how we have been supported through thick and thin, through rough patches and, even now that we have achieved macroeconomic stability, I think we are now well positioned for growth.”
Aurangzeb said the partnership has facilitated investment across several sectors, including minerals and mining, information technology, agriculture, and tourism. He cited an active pipeline of Saudi investments, including Wafi’s entry into Pakistan’s downstream oil and gas sector.
“The Kingdom has been very public about their appetite for the country, and the sectors are minerals and mining, IT, agriculture, tourism; and there are already investments which have come in. For example, Wafi came in (in terms of downstream oil and gas stations). There’s a very active pipeline.”
He said private sector activity is driving growth in these areas, while government-to-government cooperation is focused mainly on infrastructure development.
Acknowledging longstanding investor concerns related to bureaucracy and delays, Aurangzeb said Pakistan has made progress over the past two years through structural reforms and fiscal discipline, alongside efforts to improve the business environment.
“The last two years we have worked very hard in terms of structural reforms, in terms of what I call getting the basic hygiene right, in terms of the fiscal situation, the current economic situation (…) in terms of all those areas of getting the basic hygiene in a good place.”
Aurangzeb highlighted mining and refining as key areas of engagement, including discussions around the Reko Diq project, while stressing that talks with Saudi investors extend beyond individual ventures.
“From my perspective, it’s not just about one mine, the discussions will continue with the Saudi investors on a number of these areas.”
He also pointed to growing cooperation in the IT sector, particularly in artificial intelligence, noting that several Pakistani tech firms are already in discussions with Saudi counterparts or have established offices in the Kingdom.
Referring to recent talks with Saudi Minister of Economy and Planning Faisal Alibrahim, Aurangzeb said Pakistan’s large freelance workforce presents opportunities for deeper collaboration, provided skills development keeps pace with demand.
“I was just with (Saudi) minister of economy and planning, and he was specifically referring to the Pakistani tech talent, and he is absolutely right. We have the third-largest freelancer population in the world, and what we need to do is to ensure that we upscale, rescale, upgrade them.”
Aurangzeb also cited opportunities to benefit from Saudi Arabia’s experience in the energy sector and noted continued cooperation in defense production.
Looking ahead, he said Pakistan aims to recalibrate its relationship with Saudi Arabia toward trade and investment rather than reliance on aid.
“Our prime minister has been very clear that we want to move this entire discussion as we go forward from aid and support to trade and investment.”
