- Optimism for economic resurgence in the country is growing, fuelled by a combination of improving business performance plus a boost to tourism from staycations and the imminent end to quarantine for international travellers to Abu Dhabi
Abu Dhabi: Signs of a revival in consumer demand and positive business sentiment across the UAE offer a bright outlook for the country to get back on its pre-pandemic growth path, according to Aberdeen Standard Investments (ASI).
Proactive government policies and support measures that initially helped to mitigate the impact of COVID-19 enabled the economy to perform better than expected in 2020. And the roadmap suggests positive growth rates by the end of 2021 – 2.5% in real GDP, and 3.6% in non-oil real GDP
Edris Alrafi, Head of Middle East & Africa for ASI, said: “The UAE is showing its resilience and strong fundamentals, helped by effective policies and a nimble approach to adapting, at both the business and consumer levels.”
As of the start of the second quarter, improving conditions in the private sector had seen new business growth hit a 20-month high, based on the IHS Markit UAE Purchasing Managers’ Index. At the same time, business expectations had climbed for the fifth month in a row as hopes of a recovery from COVID-19 continued.
Projects such as the DIFC Innovation Hub will add to this impetus. Recently inaugurated, the new facility aims to generate new economic value by fostering the development of innovation, enterprise and talent across sectors, especially in future-oriented industries
Productivity more broadly is also set to soar over the coming months in Abu Dhabi, following the government’s move to allow up to 60% attendance at the workplace as of May 30
The country’s vaccination drive has bred much-needed confidence among consumers, too – who are now leading the charge in creating a new normal in the UAE.
Edris added: “Domestic tourism is showing strong momentum, with staycations becoming increasingly popular.”
This was reflected in hotel occupancy in April and May, during Ramadan, being only slightly below 2019 levels. In Dubai, for example, reports said industry executives confirmed they were operating at around 80% of capacity.
This is set to improve further, given that the country is expected to have vaccinated 100% of all eligible groups by the end of this year.
Demand for hotels to host conferences, exhibitions and other events is also rising once again. Dubai was able to show its ability to get back on track quickly, by hosting the Arabian Travel Market in early May. Over 60 countries took part in this four-day conference, heralding the first in-person international travel and tourism event since COVID-19 emerged.
This bodes well for the Dubai Expo later in 2021, which continues to be considered as a tipping point for domestic economic recovery.
Overseas visitors are also expected to bolster the rebound in tourism soon. As of July, for example, Abu Dhabi plans to drop quarantine requirements for travellers from most countries.
Further initiatives include the commitment from Ras Al Khaimah, the northernmost emirate of the UAE, to spend over US$130 million on 20 sustainable tourism destinations, to tap into global demand.
Edris continued: “There are various pockets emerging that show promising growth prospects across the UAE. With a disciplined focused strategy, many sectors can capitalise on the strong government, business and consumer support.”
About Aberdeen Standard Investments:
Aberdeen Standard Investments (ASI) is a global asset manager dedicated to creating long-term value for our clients. With over 1,000 investment professionals, we manage £525.7 billion (US$669.6 billion) * of assets worldwide. We have clients in 80 countries supported by over 40 offices globally. This ensures we are close to our clients and the markets in which we invest.
We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance.
Standard Life Aberdeen plc is headquartered in Scotland. It has over 1 million shareholders and is listed on the London Stock Exchange.
ASI has been active in the Middle East region for over 20 years. In 2016, ASI opened an office in Abu Dhabi Global Market (ADGM), the international finance centre of Abu Dhabi.