Standard Chartered Bank expects the UAE’s recovery to gain momentum in H2 supported by its fast-paced vaccination campaigns and Dubai's hosting of the delayed Expo 2020, which begins this October.
Rapid progress on vaccine administration has boosted recovery prospects. Almost 80 percent of the UAE’s population has now been fully vaccinated, and over 85 percent of the vulnerable population. This has allowed the economy to remain largely open, even though new cases persist, the global bank said in its Economic Outlook Q3-2021 report.
The recent surge in the Delta variant in key tourism markets including the UK and India may weaken near-term growth performance, the report noted.
However, Dubai’s hosting of the delayed Expo 2020 in October is likely to boost economic momentum in Q3. The UAE expects 25 million visitors for Expo from October 2021 to March 2022.
Even if the target is not fully achieved, the event should still drive a substantial year on year recovery in the tourism sector, after Dubai’s tourist arrivals dropped to 5.5 million in 2020 from 17 million in 2019, the report said.
The UAE non-oil sector showed signs of improvement in May. The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, posted 52.3 in May from 52.7 in April.
Improving domestic sales helped new orders, whereas international orders were stymied by COVID-19 restrictions in some destinations for UAE exports, the IHS Markit report said.
Policies aimed at attracting expatriates, including the liberalisation of residency requirements, should support UAE population growth in the years ahead, Standard Chartered Bank said in its report.
The bank also expects property prices to recover gradually in line with improving fundamentals. According to the report, higher oil production as OPEC cuts are relaxed should support growth in H2, which will trigger spending on social infrastructure and other construction projects that will boost economic activity.
The bank forecast a moderate fiscal deficit of 1.6 percent of GDP this year, and a current account surplus of 5.1 percent.
(Reporting by Seban Scaria; editing by Daniel Luiz)
This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021