UAE economy to rebound soon
Stimulus measures seen to weigh positively on key economic indicators
The UAE economy is expected to begin recovery in the second half of 2020 following the sharp downturn experienced in the months of March, April and May as a result of the pandemic, according to the Central Bank of UAE (CBUAE).
“While recovery of economic activity is projected to commence in the second half of the year, improvement in economic sentiment will hinge on deploying policy support measures,” the CBUAE said in its quarterly economic review.
The CBUAE expects the Targeted Economic Support Scheme (TESS) and the economic stimulus packages announced by both local and federal governments are likely to weigh in positively on the PMI, real estate prices, employment and credit growth with a positive impact on the overall sentiment once the virus risks are under control.
Objectives of TESS
The CBUAE launched TESS in two phases, commencing on March 14. The objectives of the TESS support measures are to facilitate the provision of temporary relief by banks
While recovery of economic activity is projected to commence in the second half of the year, improvement in economic sentiment will hinge on deploying policy support measures.”
CBUAE statement
to all affected private sector corporates, SMEs and individuals, and also facilitate additional lending capacity by banks, through the relief of existing capital and liquidity buffers.
The total amounts of the measures added up to Dh256 billion, consisting of Dh50 billion capital buffer relief, Dh50 billion zero cost funding support facility to banks in exchange for targeted relief to their retail and corporate customers affected by Covid-19 pandemic, Dh95 billion liquidity buffer relief, and reduction by half the reserve requirements on demand deposits for all banks from 14 per cent to 7 per cent, adding Dh61 billion liquidity support.
CBUAE expects oil prices to remain weak throughout the year given the severe fall in global demand, which is not expected to return to its normal levels this year, coupled with the oversupply