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Opinion and Editorial

KT edit: UAE will reinvent itself and can emerge stronger from crisis

Filed on June 7, 2020

The emirates has time and again played to its strengths while expanding its horizons. This time will be no different.

Economists are predicting a painful year for the world economy. A greater depression cannot be ruled out, say some experts like Nouriel Roubini. Trade has been hit, there is significant reduction in demand for goods and services, lockdowns have impacted travel and movement of people; joblessness is rising, and health systems are coming under increasing strain as countries battle to contain the pandemic. Economies in the Gulf are expected to contract this year. The International Monetary Fund estimates that the UAE economy will contract by 3.5 per cent in 2020 before rebounding and expanding by 3.1 per cent in 2021. The outlook is similar for other economies in the region. But what will propel growth in the coming years? Will the Gulf economies, especially the UAE, continue to benefit as the world's gateway to the Middle East and North Africa? Will it continue to connect the East and the West? Or will it have to look for a different model of growth as the post-Covid world might bring tectonic shifts to the world of trade and travel.

There is a looming fear that in the absence of a vaccine, social distancing might become a way of life for at least a few years to come. Familiarity might breed indifference, but leisure travel is not expected to return to pre-crisis levels anytime soon. It is the one sector that fuelled the rise of global aviation, travel and the hospitality industry. Besides, there is also a call for self-sufficiency in various countries which could lead to diversification of supply chains and greater focus on local consumption and produce. The UAE has benefited immensely by emerging as a travel and trade hub in the region. It has moved away from oil and diversified the economy while having a grand vision for growth. It is too early to assess the impact of the crisis as the pandemic continues to take its toll on people. Perhaps, a better way to prepare for the unforeseen changes is by starting early. Dubai has done well by opening its economy. The UAE's decision to test the entire population of over nine million would allow it to combat the virus in a more efficient manner. This pandemic will test the UAE like any other economy. The country has emerged stronger from crises before and has defied the odds; it has put rating agencies and commentators in their place by reinventing itself and playing to its strengths while expanding its horizons. This time will be no different.


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