Dubai - A report by the International Monetary Fund said the UAE has been faring better than many others in navigating the pandemic crisis
The UAE, the Arab world's second largest economy, is expected to suffer a deeper contraction this year than originally estimated, with the Central Bank of the UAE projecting a -5.2 per cent GDP growth for 2020.
According to earlier forecasts by the Central Bank, the GDP was projected to decline by 3.6 per cent this year.
"As a regional trade, tourism and transportation hub, the UAE economy was hit by the general ban on travel, while manufacturing production shrunk due to supply chain disruptions, limited export opportunities and subdued domestic demand," the CBUAE said in its quarterly review.
The IMF report said the third quarter would register a milder contraction of the non-hydrocarbon GDP that could linger, "albeit at a much milder pace, in the fourth quarter," assuming the virus is finally contained.
The report said the non-energy sector would contract by 4.5 per cent in 2020 as a due to the adverse implications of the Covid-19 on economic activity and sentiments, reflected by Purchasing Managers' Index, and the slowdown in credit growth. The reports noted that the decline in employment across the UAE would have further adverse implications on demand.
The credit growth is also expected to slowdown in the third quarter and will start recovering slowly after that, said the report. A further drop of real estate prices are also expected in the third quarter before moderating in the last quarter of the year. Following the drop in employment in the second quarter, a recovery is expected by the end of the third quarter to further improve in the second half of 2020, the CBUAE report said.
A report by the International Monetary Fund said the UAE has been faring better than many others in navigating the pandemic crisis.
"The one positive factor about the UAE is that the authorities reacted very quickly in checking the spread of the coronavirus, a move that has helped the country to gradually open up the economy," a senior IMF official has said. He said the UAE was quick to gain its access to international markets to raise funds while supporting the economy through various support measures including massive liquidity support through the banking system.