(MENAFN - Khaleej Times) The oil income positively affected current account forex inflows that grew 15.8 per cent year-on-year to 372.5 billion including 118 billion coming from oil related exports. Non-oil exports grew 21.8 per cent to 232 billion also contributed to the inflows, the research report said.
The UAE's current account outflows also showed a rising trend on the back of higher import bill of 221.9 billion, which grew 13.5 per cent and the remittances which were up 9.5 per cent to 12.3 billion.
The higher income from oil was reflected in soaring bank deposits, which rose 11 per cent to 346 billion including the government deposits, which were 19.3 per cent of the total grew 12 per cent year-on-year, said the report.
In contrast to a decline in the same period last year, there was a growth in deposits held by individuals, the report found.
Liquidity at banks, which started improving in last year reached 92.8 per cent in September 2013 as the net loan to deposit ratio declined.
Broad money aggregate growth was up 12.3 per cent year-on-year in September reflecting an improvement in economic activity.
However, growth in narrow money aggregate growth was more rapid at 22.3 per cent year-on-year reflecting the low opportunity cost of holding demand deposits.
According to the NBAD report even though there are signal of gradual recovery in bank lending the banks are still cautious in terms of expanding lending activity. Dubai has emerged out of deflation as the negative impact from rent declines ended and gave way to an earlier than expected recovery to real estate sector.
The UAE inflation is expected to gradually creep up given the disappearance of the moderating effect of the rents. Inflation rate in October grew to 1.26 per cent year-on-year, after remaining below one per cent for the last three years. In 2012, inflation was 0.7 per cent and rents declined by 2.6 per cent on average and created downward pressure.
In 2013, inflation will hover around 1.3 per cent.
Higher income means more foreign investment for the UAE. In 2012, the UAE remained a net capital exporter against a background of record high oil prices and production. Outflows attributable to public sector enterprises were 31.3 billion up from 30.5 billion; presumably it includes foreign investment activities of SWFs.
Inward foreign direct investment was estimated at 9.6 billion from 7.7 billion in 2011.
Dubai's trade and tourism numbers in the first six months of the year along with higher oil prices will help revise the overall economic growth of the UAE up from four per cent, which was the forecasted by the International Monetary Fund.