After double-digit increases, monetary aggregates slowed down markedly in 2009
Monetary aggregates in the UAE sharply slowed down through 2009 and maintained that trend this year following a double digit growth in the previous boom years, the Central Bank said on Thursday.
All types of money supply, including M1, M2 and M3 have recorded much lower growth over the past 21 months while government deposits plunged by more than Dh11 billion in the first nine months of this year, the Central Bank said in its monthly monetary survey report.
"After double-digit increases in the previous years, monetary aggregates in the UAE slowed down markedly in 2009.... a trend that continued during the first nine months of 2010," the report said.
It showed M1, increased by only around 0.9 per cent in the first nine months of this year and about 1.1 per cent year on year in September mainly because of an increase in monetary deposits.
The more relevant aggregate M2 grew by 3.5 per cent while year-on-year it rise by nearly 4.7 per cent.
"This is consistent with estimates by the International Monetary Fund of low inflation (two per cent) and a low rate of economic growth (2.4 per cent)."
The Central Bank said the lower increase in M3 by 1.5 per cent during the first nine months of 2010, is due to a decrease in government deposits.
The figures showed government deposits with the country's 23 national banks and 28 foreign units slumped to around Dh195.3bn at the end of September from nearly Dh207.2bn at the end of 2009, a decline of Dh11.9bn.
M 1 includes total currency in circulation while M2 covers M1 plus currency outside banks, demand deposits, time and savings deposits. M3 involves M2 plus government deposits.
© Emirates 24|7 2010
