Why UAE will be able to ride out Covid crisis faster
The GCC's non-oil sectors - retail, healthcare, education, mega-event projects and renewable energy - will continue to dominate the economy.
Dubai - Nation has history at being better at recovering from challenges, and new-age tech will help further
The UAE is much more resilient than its GCC counterparts and its economy will ride out the current pandemic crisis with the help of new-age technologies, say analysts.
Sarwant Singh, managing partner at Frost & Sullivan, said the UAE fares better when it comes to recovery as witnessed in previous recessions. However, this time it is a little different.
"Covid-19 is having a very harsh impact on some of the UAE's core sectors of hospitality, retail, real estate and aviation. I, therefore, feel this time the UAE does not necessarily have an advantage over its peers in the GCC region, and future economic policies will provide evidence of its recovery speed. Future policies currently point towards a more aggressive push towards diversification - a trend that will gain greater momentum across the GCC at large," said Singh.
"The UAE's focus towards next-generation growth industries like edutech, gaming, fintech, healthtech, hitech manufacturing and its commitment to building a circular economy will help navigate this downturn successfully by attracting new FDI," he added.
To support businesses and the overall economy, GCC governments have allocated two per cent to 30 per cent of its GDP in economic stimulus packages.The business environment in the region will experience a transformation that will have a far-reaching impact on economic trends and social dynamics.
Furthermore, with the surge in digital penetration in the next decade, the GCC's non-oil sectors - retail, healthcare, education, mega-event projects and renewable energy - will continue to dominate the economy, said Frost & Sullivan.
Saeed Mohammed Al Tayer, managing director and CEO of the Dubai Electricity and Water Authority, said during a recent virtual Press conference that the beginning of the year was hard for everyone, including the UAE.
"The only sector that saw halt was restaurants. But other than that, a good growth has been seen in other sectors. By the end of the year, we'll see a very good chance as the situation is going to be better. Compared to the beginning of the year, we are going to be much better than any other country in terms of production," he said.
Signs of recovery
Frost & Sullivan says signs of an economic recovery in the GCC will be visible from the second quarter next year and the region will witness impressive growth through 2030.
"The pandemic and diminishing oil prices caused the contraction in 2020. However, in the optimistic scenario, there will be signs of economic recovery by second quarter of 2021. This will be due to member nations emphasising economic diversion to non-oil sectors and strategy implementation to encourage private enterprises to invest in and develop projects across all major sectors of the economy," said Malabika Mandal, visionary innovation group consulting analyst at Frost & Sullivan.
She added that the GCC region is expected to contract in 2020 before rebounding in 2022. "It is expected to witness impressive growth through 2030, driven by global and regional mega trends."
Florence Eid-Oakden, CEO and chief economist at Arabia Monitor, said a potential second wave of Covid-19 is delaying the economic rebound into the latter part of 2021 for the Mena region.
"Past bouts of belt-tightening tended to rely on a fast rebound in oil prices to refill state coffers. This time, the risks are greater as a gloomy demand outlook makes an oil market recovery unlikely this year."