According to government forecasts, Dubai’s economy is projected to expand by 4 percent in 2021, driven by its successful response to protecting lives and livelihoods from the consequences of COVID-19 and battling a pandemic-driven economic slowdown.
The Dubai Media Office said in a statement that the solid economic fundamentals of Dubai, the commercial and trading center of the Middle East, and the pandemic-delayed Expo 2020 from October to next year have also provided the foundation for a rapid rebound.
However, the growth next year will follow an expected economic contraction of 6.2 percent in 2020, the media office said. In the first half of the year, the economy of the emirate shrank 10.8 percent, due the huge shock of unprecedented global and local steps to curb COVID-19, it said.
Dubai has made efforts to aid companies and individuals, unveiling four $1.85 billion stimulus packages to help mitigate the shock of the pandemic and the subsequent fallout in the form of job losses and business disruption.
Packages rolled out between March and October this year addressed the demand side, covering consumption, investment, trade and travel sectors, as well as on the supply side including the workforce, supply chains and 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. This has paved the way for Dubai to be one of the very first cities to gradually reopen its markets and businesses.”
Consequences of COVID-19
Dubai’s growth projections follow the Central Bank of the UAE’s (CBUAE) estimate of a 2.5 percent expansion of the country’s economy next year. The rebound of the Arab world’s second largest economy in 2021 will be led by a 3.6 percent acceleration in the non-oil sector, according to the regulator’s third quarter economic review.
The COVID-19 pandemic has tipped the global economy into its deepest recession since the 1930s. In October, however, the International Monetary Fund (IMF) revised its growth estimate upward to a contraction of 4.4 percent, from an earlier 4.9 percent contraction forecast. The economic slowdown in the emirate, according to the Dubai Economy, is in line with the rest of the major economies across the globe.
The IMF expects the UK economy to shrink 9.8 percent in 2020, the overall Eurozone to contract 8.3 per cent, Canada by 7.1 percent, the UAE by 6.6 percent and Saudi Arabia economic output to shrink by 5.4 percent.
COVID-19 vaccine and recovery
A free mass inoculation campaign of the Pfizer-BioNTech vaccine was started last day in Dubai. In July, the Emirates opened up to tourism. However, according to media office estimates, global restrictions on travel during lockdowns and a resulting slow pickup in demand have affected the hospitality and restaurant sector of the emirate, which is expected to contract 20 percent this year.
The transport and storage sector is expected to shrink 11 percent, while the retail and wholesale sector is projected to contract 9 percent, according to data by the Dubai Statistics Centre.
Arif Al Muhairi, executive director of Dubai Statistics, said the decline is 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 the year, grew 1.4 percent, enhancing its contribution to the emirate’s economy to 11.5 percent in the first half of the year. “The banking sector in the country is in a strong position to face any future challenges,” Mr Al Muhairi said.
Initiatives to power the recovery
The “Future Foresight” projects by the government have also laid out the foundation for a rapid economic rebound. “These efforts include investment in healthcare 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.
Dubai’s efforts to achieve sustainable growth and a rapid transition to a knowledge-based economy are backed by the continued flow of local and foreign investments, whether from the government or the private sector, he said.
The economic recovery will be further accelerated by initiatives, including the launch of the Nasdaq Dubai Growth Market in October, a virtual work program for overseas professionals and existing measures such as the golden visa.