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Economic recovery to make UAE costlier: EIU

By Shuchita Kapur

Most Mena cities cheapest locations in the world to live in
On the back of economic recovery, the UAE is expected to become a costlier place to live in, as per the findings of Economic Intelligence Unit (EIU).

According to EIU, as the economy recovers, and oil and international commodity prices increase, it expects inflationary pressures to re-emerge gradually, especially in light of the projected expansion in infrastructure development.

"We expect inflation in 2011 to average 2.5 per cent owing to an increase in prices of grains, sugar and other basic items. However, low housing costs will keep inflation at a manageable level, at an average of 2.2 per cent in 2011-15."

However, many cities in the Middle East and North Africa remain some of the cheapest locations in the world to live in, according to a new survey, Worldwide Cost of Living 2011, released by Economic Intelligence Unit (EIU).
Cities like Algiers (Algeria), Tehran (Iran) Tunis (Tunisia) and Jeddah (Saudi Arabia) all feature in the bottom ten, as per the survey.

"The low cost of living in these locations is driven by a mix of weakened currencies, low levels of development and, in some cases, price controls and subsidies on staple goods," said the survey.

At the bottom of the survey, the ten cheapest cities have a strong presence in the Indian subcontinent. The survey reveals, that despite the rise of India as a growing emerging-market economy, the low cost of living in cities continues to reflect the fact that the subcontinent remains a comparatively cheap place to live and work. Karachi in Pakistan is the cheapest location surveyed, with a cost of living level at less than one-half of that of New York and one-third of that of Tokyo. It is joined in the bottom ten by Dhaka (Bangladesh) and the Indian cities of Mumbai and New Delhi. Colombo (Sri Lanka), the only other city surveyed on the Indian subcontinent, is one of the 20 cheapest cities in 114th place.

On the other hand, the most expensive city in the world continues to be Tokyo. Until 2006, Tokyo had been at the top of the global cost-of-living ranking for 14 uninterrupted years before low inflation, weak consumer confidence and a declining Japanese yen reduced the cost of living. Between 2006 and 2009 Oslo and then Paris were the costliest cities in the survey, with Tokyo pushed down to fifth place in the ranking. Low inflation and poor consumer confidence have persisted in Japan, but the yen has strengthened significantly over the last two years, pushing Tokyo back to the top of the ranking last year, the survey puts it.

The survey also states that most other cities in the top ten have a familiar European flavour. Oslo, Paris, Geneva, Zurichand Frankfurt have all long been regarded as traditionally expensive places to visit. This is despite economic weakness in the euro zone, with the high-profile problems in Greece, Ireland, Portugal and Spain depressing demand elsewhere in Europe and pegging back the strength of the single currency.

Also among the top ten, Osaka in Japan shares Tokyo's inherent costliness and Singapore's role as a global financial centre sets it apart from other Asian cities.

Of particular note is the rapid growth in the relative cost of living of Australian cities. Sydney and Melbourne are ranked sixth and seventh respectively and are closely followed by Perth and Brisbane in 13th and 14th place in the ranking.

© Emirates 24|7 2011