Abu Dhabi: First Abu Dhabi Bank (FAB), the UAE’s largest bank and one of the world’s largest and safest financial institutions, has published its 2021 Global Investment Outlook Report: ‘Paving the path for our investors to grow stronger’. The report, written by the bank’s industry experts, examines the current global economic and investment environment, providing insights into key macro-economic trends.
After a year of extremes in 2020, the report suggests a V-shaped recovery is possible for the UAE, with the sharp contraction of the past year followed by a steep increase in activity as the economy emerges from COVID-19. Important factors include a recovery in tourism and oil prices, and strong links to emerging markets.
Based on projections from the Central Bank of the UAE (CBUAE), the national economy should grow by around 2.5 percent overall and 3.6 percent for non-oil sectors, after shrinking by around six percent in 2020 and five percent for non-oil. FAB’s predictions for the UAE include signs of an imminent improvement for incoming tourism, as pent-up travel demand and the country’s successful management of the COVID-19 virus converge to make the UAE a potentially top destination this year. The Dubai EXPO’s rescheduling to open in October 2021 will add further strength, and an improvement in tourism will have a positive effect on other sectors, including retail and real estate activity, as the COVID-19 immunisation programme moves forward. FAB predicts the oil price for Brent will recover to average USD 58 per barrel this year, followed by USD 65 in 2022. In the medium term, improved growth should also result from well-received reform initiatives, as well as from normalised relations with Israel and Qatar.
For international markets, the report predicts that a good return to global growth is possible by the second half of 2021, with developed economies entering a period of stabilisation as they emerge from COVID-19. Emerging markets were particularly impacted by the pandemic, but currency devaluations, along with massive fiscal and monetary stimuli in some of the biggest developing economies, suggest emerging markets may be in good shape for a period of gains. An overvalued US dollar is also likely to weaken further than its recent falls during 2021, partially as a result of a reversal in many of the haven-seeking flows that drove investors into US assets earlier last year, which should also support emerging markets and commodities.
Alain Marckus MD and Head of Investment Strategy and Investment Management, Personal Banking Group, said: “Global markets will begin a clear recovery from the COVID-19 downturn during 2021, but this will start with a move towards stability rather than acceleration. Developed economies including the United States and Europe will feel continuing effects from cautious consumer spending, higher rates of unemployment following the pandemic, and business restructuring. The United Kingdom will also contend with the full impact of Brexit and its departure from the European Union. Effectiveness in responding to the pandemic will likely be a factor in the speed of recovery in different markets, including the impact of stimulus measures. After their worst year in several generations, the world’s largest developing nations are poised for a strong recovery in 2021. As soon as vaccines are widely available, their economic recoveries could be very strong, given the record stimulus released in many of the large emerging economies this year.”
Among MENA markets, GCC states will benefit from government stimulus programmes and extra liquidity injected into local economies in response to COVID-19. According to Fitch Ratings, off-budget stimulus has amounted to nearly 30% of GDP in Bahrain and Oman, more than 10% in Kuwait, Qatar and the UAE, and more than 7% in Saudi Arabia.
GCC economies will also benefit as oil demand and prices continue their slow recovery from severe falls in Q2 of 2020. However, with the US Energy Information Administration (EIA) estimating the global demand for petroleum and liquid fuels was 92.38 million barrels per day in 2020, about 8.8 million barrels per day lower than the previous year, a return to the levels recorded in 2019 is probably not going to occur until 2022.
FAB’s Global Investment Outlook 2021 can be viewed and downloaded here.
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About First Abu Dhabi Bank (FAB)
FAB is the UAE’s largest bank and one of the world’s largest and safest financial institutions. FAB’s vision is to create value for its employees, customers, shareholders and communities to grow stronger through differentiation, agility and innovation.
Headquartered in Abu Dhabi, the bank’s international network spans five continents, providing global relationships, expertise and financial strength to support local, regional and international businesses seeking to do business at home and abroad. FAB is a trusted adviser and regional partner to major institutions, emerging companies and individuals seeking to do business in the UAE, the MENA region and beyond. As an engine of growth for the region, it helps customers to thrive and grow stronger by managing risk, providing access to capital and facilitating trade flows across developed and emerging markets.
FAB continuously anticipates evolving requirements, develops innovative solutions and moves in tandem with customers to offer an extensive range of tailor-made products via its market-leading Corporate and Investment Banking (CIB) and Personal Banking Group (PBG) franchises.
Aligned to the Abu Dhabi Economic Vision, inspired by global standards and guided by the expectations of stakeholders, FAB takes a leading role in fostering development and driving change towards a more sustainable future. FAB sees beyond traditional banking and embraces a challenger mindset. Its ambition is to contribute to social and human development which creates a dynamic, inclusive and tolerant society.
With total assets of AED 955 Billion (USD 260 Billion) as of September-end 2020, FAB is rated Aa3/AA-/AA- by Moody’s, S&P and Fitch, respectively, the strongest combined ratings of any bank in the MENA region. The Bank has been ranked by Global Finance as the Safest Bank in the UAE and the Middle East, and the 32nd Safest Bank globally. The Banker’s Top 1000 World Banks 2020 list, measured by Tier 1 capital, ranked FAB as number one in the UAE, second in the Middle East and #85 across the globe - in addition to ranking the bank #109 by assets in the same list. FAB is also a regional sustainability leader, and a constituent of MSCI ESG Leaders and FTSE4Good EM indices.
For further information, visit: www.bankfab.com, or https://www.growstronger.com/ Grow Stronger or https://www.bankfab.com/en-ae/updates for COVID-19 related updates.
© Press Release 2021
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