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As world sinks, will UAE swim?
Economists are positive on the UAE economy, even as the IMF warns the world’s labour situation could threaten entire societies. Kipp takes a look.
September 14, 2010 4:34 by Sam Potter
Growth, of course, brings with it the spectre of inflation, but Standard Chartered has positive news on that front, too. Its Global Focus for September says inflation in the UAE remains low and is unlikely to change, and in fact that “official numbers may overestimate inflationary pressures.” Yes fuel prices are rising, it says, but the house price crash is keeping inflation subdued.
In fact the only negative factor the bank brings up is credit in the UAE. As banks seek to recover from a position in which loans far exceed deposits, lending has slumped, which could be bad for growing businesses.
It’s all a far cry from many other countries, if the International Monetary Fund is to be believed. Khaleej Times reports that this week, the IMF said that the fact more workers worldwide were out of work for longer periods was weakening social cohesion, raising the risk of unrest and even threatening democracy.
“The labour market is in dire straits,” IMF Managing Director Dominique Strauss-Kahn told a one-day meeting on Oslo. He said that the Great Recession had left a “wasteland of joblessness”. “We must acknowledge that the crisis will not be over until unemployment declines significantly,” he said, calling growth and jobs the “most urgent problems”.
European Commissioner for Employment and Social Affairs Laszlo Andor said 2010 had been an “annus horribilis” for unemployment. “If we fail to act … 2011 may still turn out to be the annus horriblis for social cohesion.”
The IMF believes extended fiscal stimulus is worth the additional debt if it helps cut long term unemployment, “which poses an even costlier burden on society as workers get discouraged, lose lifetime earnings or leave the labour market,” says Khaleej Times.
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