DUBAI’S ECONOMY EXPECTED TO GROW BY 4% NEXT YEAR
▶ Effective Covid-19 response set to drive expansion, emirate says
Dubai’s economy is forecast to expand by 4 per cent next year, with the growth driven by its effective Covid-19 response to protect lives and counter an economic slowdown, according to government projections.
Strong economic fundamentals and the Expo 2020 Dubai, which was pushed back to next year, have also provided the bedrock for a quick rebound, the Dubai Media Office said on Wednesday.
However, next year’s expansion will come after an economic contraction of about 6.2 per cent this year.
The emirate’s economy shrank by 10.8 per cent in the first half of the year due to the massive shock of global and local measures to contain the pandemic, it said.
Dubai, the commercial and trading hub of the Middle East, took steps to support businesses and people and unveiled four stimulus packages worth Dh6.8 billion ($1.85bn), to help offset the fallout from job losses and business disruptions.
Measures introduced between March and October this year addressed the demand side, covering consumption, investment, trade and travel sectors.
They also addressed the supply side, including the workforce and supply chains, in addition to cutting the cost of doing business in the emirate.
“Our leadership’s directives were focused on ensuring that the short-term impact of the Covid-19 pandemic does not translate into a long-term economic hardship that would inflict lasting damage on people and businesses by way of job losses and bankruptcies,” said Sami Al Qamzi, director general of Dubai Economy.
“This has paved the way for Dubai to be one of the very first cities to gradually reopen its markets and businesses.”
Dubai’s growth projections come after the UAE Central Bank projections for a 2.5 per cent expansion at a national level next year.
The rebound of the Arab world’s second-largest economy in 2021 will be led by a 3.6 per cent acceleration in the non-oil sector, according to the regulator’s third-quarter economic review.
Overall economic packages and initiatives by the federal and local governments since the outbreak began stand at more than Dh388bn.
The pandemic tipped the global economy into its deepest recession since the 1930s. However, the International Monetary Fund revised its growth estimate upward in October and said the world economy would shrink by 4.4 per cent, compared with an earlier prediction of a 4.9 per cent contraction.
The slowdown in the emirate is in line with that of major economies across the globe, according to the Dubai Economy.
The fund expects the UK economy to shrink by 9.8 per cent this year, the eurozone by 8.3 per cent, Canada by 7.1 per cent, the UAE by 6.6 per cent and Saudi Arabia by 5.4 per cent.
Dubai began a free mass inoculation campaign with the Pfizer- BioNTech vaccine on Wednesday. The emirate opened to international travellers in July.
However, global restrictions on travel during lockdowns and a subsequent slow pick-up in demand have affected the emirate’s hospitality and restaurant sector, which is expected to contract by 20 per cent this year, according to the Dubai Media Office.
The transport and storage sector is expected to shrink by 11 per cent, while the retail and wholesale sector is set to contract by 9 per cent, according to the Dubai Statistics Centre.
Arif Al Muhairi, executive director of the Dubai Statistics Centre, said the decline was within the “expected range of economic contraction, given the massive global economic impact of Covid-19, especially in the first half of the year”.
Financial services and insurance activities during the first six months of 2020 grew by 1.4 per cent, enhancing the sector’s economic contribution to 11.5 per cent during the period.
“The banking sector in the country is in a strong position to face any future challenges,” said Mr Al Muhairi.
The “Future Foresight” projects by the government have also laid the foundation for a rapid economic rebound.
“These efforts include investment in health care and food security that will not only reduce the likelihood of future shocks, but also contribute to enhancing the emirate’s resilience against such shocks,” Mr Al Qamzi said.
The continued flow of local and foreign investment, whether from the government or the private sector, are supporting Dubai’s efforts to achieve sustainable growth as it rapidly transitions into a knowledge-based economy, he said.
The launch of the Nasdaq Dubai Growth Market in October, the introduction of a remote-working visa programme for overseas professionals and existing measures such as the golden visa are expected to hasten the economy’s recovery.