UAE economic recovery gaining momentum, says Standard Chartered
UAE’s real GDP projected to grow 2.5% in 2021, 3.0% in 2022 and 3.5% in 2023
The UAE’s economic recovery is gaining momentum due to the rapid administration of the Covid-19 vaccine and hosting of Expo 2020 Dubai, according to a new report released on Sunday.
“Almost 80 per cent of the UAE’s population has now been fully vaccinated, and over 85 per cent of the vulnerable population. This has allowed the economy to remain largely open, even though new cases persist. The recent surge in the Delta variant in key tourism markets including the UK and India may weaken near-term growth performance. However, Dubai’s hosting of the delayed Expo 2020 in October is likely to boost economic momentum in Q3,” Standard Chartered said in a new report.
Interestingly, Capital Economics also noted that the Delta variant poses a bigger threat to non-Gulf economies than the oil-exporting GCC countries.
“That’s good news for the Gulf countries which, for the most part, have achieved high levels of vaccine coverage. Some restrictions may still be tightened to curb outbreaks – Abu Dhabi reintroduced some measures to coincide with Eid al-Adha. But, in general, containment measures will lie towards the softer end of the spectrum and inflict little economic damage,” Capital Economics said.
It said the Gulf economies are likely to lead the region’s economic recovery over the next few years.
Standard Chartered noted that even if the target of 25 million visitors for Expo 202 is not met, the event should still drive a substantial recovery in the tourism sector.
“We expect the UAE’s recovery to gain momentum in the second half of 2021,” Standard Chartered analysts said, adding that the UAE’s real GDP is projected to grow 2.5 per cent in 2021, 3.0 per cent for 2022 and 3.5 per cent for the next year.
“While expatriate population growth has slowed, it did not contract in 2020 as initially feared. Policies aimed at attracting expatriates, including the liberalisation of residency requirements, should support UAE population growth in the years ahead. In line with improving fundamentals, we expect property prices to recover gradually,” it added.
In addition, higher oil production as Opec cuts are relaxed should also support growth in the second half of the year, providing fiscal space for spending on social infrastructure and other construction projects to boost economic activity.
It sees the consumer price index staying at 2.7 per cent this year and 3.0 per cent over the next two years.
In the first quarter, oil production increased 4.3 per cent quarter-on-quarter, in line with the Opec agreement although it fell 17.6 per cent year-on-year.
“We forecast a moderate fiscal deficit of 1.6 per cent of GDP this year and a current account surplus of 5.1 per cent. Debt levels are likely to stay elevated; debt-to-GDP was around 77 per cent in 2020. External liquidity remains a key strength. The UAE’s foreign assets increased to Dh393.8bn in April from a low of Dh350.7bn in June 2020,” Standard Chartered said in its third-quarter outlook report.
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