Recovery in sight for UAE economy, says GlobalData
GlobalData editor John Bambridge says the country’s ‘no-nonsense approach’ has put it in a good position
With one of the most diversified economies among regional oil producers, vast sovereign wealth and easy lines of credit, the UAE already had an economy that was better positioned to roll with the punches of the COVID-19 crisis than many others in the region and around the world. While the global pandemic has slashed oil prices and devastated specific industries – especially aviation – the UAE has responded decisively to the crisis - curbed case numbers, enforced basic COVID-19 hygiene, ramped up testing capacity, and invested heavily in test and vaccine development.
The no-nonsense approach has built confidence in the region, despite the inherent vulnerabilities of the UAE economy to the pandemic, which has had a deep impact on the finance, travel and hospitality sectors. However, the UAE’s financial sector, which will be pivotal to future growth, has been well supported. The government’s efforts to move back to a new economic normality swiftly but safely is also positive. This contrasts with countries where the reopening of the economy has either been rushed at the expense of rising cases, as in the US, or where there is no end in sight to the lockdown, as in Jordan.
Economic activity shows signs of improving, driven in large part by domestic demand as the country’s large expatriate population gets back to spending after months of restrictions on everyday activities. Project activity, while reduced, has continued to rumble along in the background, with activity in the upstream energy and utilities sectors providing ongoing opportunities for contractors.
When travel resumes, even if international tourist traffic and inbound visitors remain curbed, the role of the UAE’s airports as transit hubs for business and leisure travellers should ensure a ramp up in passenger volumes again - potentially ahead of the global curve. As other regional economies continue to wobble, the UAE will remain an attractive place to do business.
Looking ahead to 2021, the postponement of Expo 2020 increasingly looks like a boon that will allow Dubai to ride a wave of post-COVID-19 enthusiasm for new business opportunities augmented rather than diminished by the global pandemic.
John Bambridge is the features and analysis editor of GlobalData’s MEED