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Inflation in Dubai will plunge from 14 per cent in 2007 to six to eight per cent this year, and despite the impact of the financial crisis, the emirate’s GDP will still grow by two to four per cent, a senior Dubai official said yesterday.

“According to government sources, inflation would drop to six to eight per cent but our research institute is also citing a Standard Chartered report stating that inflation could fall to as low as two per cent in 2009, that is yet to be seen,” Hisham Abdullah Al Shirawi, Second Vice-Chairman of Dubai Chamber, told Emirates Business on the sidelines of the Arab Investment Forum yesterday.

Standard Chartered earlier this month said the UAE inflation could drop to around two per cent this year as rents and commodity prices ease and liquidity dries up.

UAE Minister of Economy Sultan bin Saeed Al Mansouri, on the other hand, put inflation estimate for the year in the range of five to eight per cent.

The deflation is in line with the authority’s expectations. “Definitely, certain prices have to come down,” he said. “The supply side will continue but prices will come down especially in the real estate sector due to the drop in demand.”

“The lack of financing resources available in certain sectors will also reduce demand to an extent. Reduction in demand and continuation of supply will see fall in prices,” he said.

He said Dubai’s economy remains strong thanks to the various measures undertaken.

On whether de-pegging remains an issue, he said: “De-pegging is wishful thinking. It’s a sovereign decision. We are tied up with the local, regional and international agreements, which we can’t nullify by a single decision. And any single decision that the government will undertake will be in co-ordination and consultation with the rest of the GCC states.”