The International Monetary Fund (IMF) has stated that the UAE’s economy is gradually recovering and is ready to accelerate its growth, as a result of the country’s “early and strong response” to the pandemic and swift mass immunization program.
Last year, the UAE went into a deep recession as the COVID-19 outbreak wreaked havoc on critical industries including trade and tourism, while record low oil prices drained petroleum income. The IMF predicted a 6.1 percent drop in GDP in 2020 but noted that the recovery has begun to acquire traction.
“A gradual recovery is expected in 2021, supported by the UAE’s early and strong health response, continued supportive macroeconomic policies, and rebound in tourism and domestic activity related to the delayed Expo 2020, set to begin in October,” the IMF said in a statement.
According to the IMF, non-oil GDP growth could reach 3 percent this year, with stronger crude output supporting the oil sector and higher oil prices improving fiscal and external balances.
“Nevertheless, uncertainty around the recovery remains globally and, in the UAE, and the overall balance of risks is tilted towards the downside, with a resurgence of the pandemic the key source of risk to the outlook,” the IMF said.
The Fund remarked that the UAE banking system’s liquidity remains strong, but banks’ asset quality has deteriorated, and the crisis’ impact on their balance sheet could worsen further. The Gulf state’s policy responses to the crisis are reasonable, but assistance should be increasingly targeted to individuals in need in the future, it added.
“The UAE’s ambitious 50-year reform agenda holds considerable promise to deliver higher levels of future diversified and inclusive economic growth. This comes at an important moment for the UAE as it celebrates its Golden Jubilee and looks to leverage its talent, knowledge base, and vision for sustainable and smarter future growth,” the IMF concluded.