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Posted On: 20 May 2009 09:28 am
Updated On: 12 November 2020 02:09 pm

Zero inflation claim stuns businessmen

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The talk of zero inflation by the economic adviser to the Emir has surprised businessmen as they maintain the price levels still remain high and rentals of housing and commercial properties, though, are coming down, they nevertheless continue to be on the higher side. Dr Ibrahim Al Ibrahim told a local Arabic daily in an interview that the rate of inflation in the country had dropped to zero percent and could, in fact, be lower. Al Ibrahim said he rejected suggestions from an international bank that receding inflation would adversely impact the Qatari economy and lead to its contraction. “This is not true. Our economy remains growth-oriented. The growth this year will be positive.” He described the flattening out of the rate of inflation as a natural correction, maintaining that since the prices had gone up in a tizzy over the past few years, it was quite natural for them to recede. Al Ibrahim said although it was difficult to predict exactly but added that he expected real estate prices to ease further in the latter half of the current year. He even stressed: “Never again are real estate prices going to zoom so high.” The official, though, admitted medicines, some food items and garments had, in fact, become dearer post-recession. “We have conducted a survey and it suggests that rentals and food prices have dropped,” said the economic adviser. He described the global recessionary pressure as responsible for pushing the price levels in the country down. “This is a good sign,” he stressed. But top Industrialist and businessman, Abdul Hadi Al Shahwani said he was surprised by the talk of zero inflation. “What is the ground on which Al Ibrahim is basing his estimates. We are businessmen and we know that the prices still remain high,” said Al Shahwani in remarks to The Peninsula. “I haven’t read the interview but from what you are telling me, I can say that the talk of zero or negative inflation is incorrect,” he said, talking on the phone from Germany. It cannot be denied that the Qatari economy is shrinking a bit because of lower oil prices in the international markets, he said arguing: “If this is not true, then why have we reduced estimates of revenues and a budgetary deficit of QR5.8bn for the current fiscal,” asked Al Shahwani. While Al Ibrahim could not be contacted for comment, a businessman seeking anonymity said for zero inflation the supply of products and services must exceed demand in a way that the gap is too wide, which was not the case in Qatar. Yet another businessman, who didn’t want his name in print, said he didn’t see any changes in the price levels, arguing that on the ground level the prices remained upwards. “Since we are importing most of the things, the inflation we have is imported. How can then we have zero inflation,” he wondered. The Economy and Finance Minister, H E Yousuf Hussein Kamal, had in an interview to a UAE newspaper said last week that the rate of inflation in the country was in double digits.