KT Edit: What the world can learn from UAE’s economic resurgence

Draconian measures to contain the Covid pandemic wreaked havoc on the global economy. The steep and almost instantaneous downturn saw some of the worst effects on global markets ever recorded. Economic growth dropped by 20 percent in the course of a few months. Projections for global poverty spiked by a whopping 700 million people.

Into 2021, over 100 countries still continued to impose lockdown measures in attempts to quell new waves of the virus. Against the backdrop of this drastic model, one country implemented a much different strategy.

From the outset of the crisis, the UAE government made clear its intention to mitigate as much as possible any and all disruption caused by public health measures. Authorities resorted largely to curfews rather than rushing to full lockdowns. When public facilities such as schools were closed by government order, they were limited and framed within a specific timescale which helped maintain continuity at both the social and economic levels. Perhaps most importantly, the government augmented its hospital administration policies to provide maximum care to all coronavirus patients and expand capacity to ensure these vital facilities could continue to operate.

In general, the UAE went to great lengths to ensure routine activities could continue, albeit with some public health restrictions. When it came to international travel, for instance, Dubai, one of the biggest international business and tourist hubs, implemented a system of testing to help keep its airports open. While flights were completely suspended for brief periods, this system remains the baseline of operations for UAE travel today.

Now, with the focus shifting to post-pandemic recovery, the Emirates is experiencing some of the fastest economic rebounds in the world.

Already in June, international observers noted that the UAE was on a steady rise to gain back its losses from the 2020 crisis. The Regional Economic Outlook (REO) from the International Monetary Fund (IMF) reported a month earlier that both rising oil prices and the country’s early vaccine roll-out (Dubai began its vaccination program in early December 2020) would contribute greatly to its rebound.

By late July, the government was already implementing strategies to diversify the economy and spread recovery effects to different sectors. Dubai’s Land Department reported, for instance, that the emirate’s property market put together 6,388 transactions worth Dh14.79 billion in the span of four weeks, representing the highest in value in property sales since 2014. According to a more recent IMF report, the non-oil economy of the UAE alone is on the path to growing by three percent by the end of 2021. To keep this momentum, both federal and local governments continue to fiscally support businesses and other parts of the economic activities. In all, authorities in the UAE have already spent some Dh400 billion to support the economic recovery. The UAE Central Bank’s Targeted Economic Support Scheme, with a budget of Dh50 billion for a zero-cost loan initiative, was extended until June 2022. This will ensure a steady flow of liquidity into the markets for the next year and boost both consumer and business owner confidence.

The bounce back in the UAE has also caught the attention of foreign capital. Interestingly, it is the non-oil industries such as property, tourism, and the IT sector that are holding some of the biggest promises for investors. Head of Analysis for the Middle East at investment firm Aberdeen Standard told Trade Arabia recently that the attractiveness of the UAE economy to inventors will be a major driver in the country’s continued growth. “Investors can expect key sectors to move in a positive direction in the next few months. They will welcome this rebound in the economy after the GDP contraction of 4.8 per cent in 2020.”

While the economic and social circumstances of countries differ drastically from the UAE, the model implemented by policymakers in Dubai stands as an example in many ways for the rest of the world.

By aiming for maximum resilience and minimum restriction, the UAE ensured the least amount of damage to both its private and public sectors caused by health measures. Freeing up its industries, maintaining steady and continuous public support, and adopting measures to diversify the economy and attract investment, have all paid off, both in allowing the country to traverse the worst parts of the pandemic, and establish a path to recovery.

Mohammad Fawaz is the director of Gulf Policy Research Group

• Dubai