The UAE's broad money supply (M3) increased 2% m/m and 6.7% ytd to AED 1.155tn (USD 315bn) at end-March 2013, lifted by rising bank deposits and the remaining components, mainly M1 and M2, the central bank said. The M3 growth, however, remains well below those achieved during the oil boom which ended in late 2008. Back then, strong oil revenue, rapid credit growth and the unprecedented boom in private and public spending on real estate and infrastructure projects have boosted M3 and consequently CPI inflation.
The Q1 reading signals a gradual recovery in bank lending and saving deposits despite the banks’ still cautious credit policy. M3 growth, an indicator of future inflation trends, is the sum of M2 plus government deposits at bank operating in the UAE as well as at the central bank.
M2, which comprises of M1 and quasi-monetary deposits, increased 1.0% m/m and 6.1% ytd to AED 915.3bn at end-March. Money supply aggregate M1 (currency in circulation plus monetary deposits) grew 3.2% m/m to AED 327.4bn during the month.
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