UAE economy on resurgence mode
Central Bank forecasts show that the economy is back on a growth trajectory
Various indicators and outlook reports form official independent channels indicate that the UAE economy is back on a sustainable growth trajectory after facing multiple challenges from Covid-19 pandemic. While the country had to allocate huge resources protect its citizens and residents from the spread of the virus during the past 18 months, it faced serious revenue losses from decline in oil prices in 2020 as shutdowns across the world forced a contraction in oil demand.
In the early months of the pandemic, the non-oil economy too took a hit as global supply chain disruptions, travel restrictions and rupture of payment cycles took toll on the non-oil private sector activities. The latest official projections from the Central Bank of UAE and government agencies and independent sources such as the IHS Markit and the Institute of International Finance show the country has passed several major milestones.
Growth indicators
According to the CBUAE forecasts the economy is set to grow at 2.1 per cent this year and double its GDP growth year on year to 4.2 per cent in 2022. The upward revision in GDP growth is the result of the continued increase in public spending, banks’ credit outlook, higher employment and better business sentiment and the positive impact of Expo 2020 Dubai on the economy.
Being a major tourism, transit and trade hub in the region, the UAE’s non-oil economy is expected to benefit from the opening of travel restrictions and events such the Fifa World Cup in Qatar in 2022. Latest Purchasing Manager’s Index from HIS Markit shows non-oil private sector continued its growth in August with solid surge in output and employment. The PMI data for Dubai in August reinforces the recovery trend with the pace of growth in nonoil activity reaching its highest level for almost two years.
All major categories of economic indicators such as the leading indicators, coincident indicators and lagging indicators point to the recovery under way in the country and provides a clear picture of how the current economic conditions are shaping the future. While the economic data through the crisis is providing useful lessons on how the UAE economy managed to remain resilient to the challenges, the strategic plans that were meticulously executed by various agencies and the central bank will serve as a template for the world in crisis management strategies.