The Impact of COVID-19 on the UAE Economy

Just like many other economies around the world, Arab states’ second largest economy, the UAE, is also suffering from the impact of COVID-19. “Trade, tourism and transportation” are the foundations of the UAE economy and as the region has had one of the strictest lockdowns in the world, such travel restrictions and strict lockdown measures have had a serious impact on tourism, businesses and the supply chain of businesses in the UAE. The UAE’s Central Bank has recently reported that they have seen a “significant decline in the economic activity” as a result of the COVID-19 lockdown.

Recent reports of the International Monetary Fund (IMF) projects the real GDP of the UAE as -6.6 percent for 2020, citing the impact of low oil prices as one of the key reasons for the decline in the UAE economy.

That being said, the UAE government has recently introduced several policies to boost the economy and moderate the impact of COVID-19, with stimulus measures worth about 18 per cent of the GDP of the UAE. Out of the AED 100 Billion worth of monetary aid announced so far, the majority of the funds have been earmarked towards SMEs as well as consumers. The Emirates, like Dubai and Abu Dhabi have announced individual fiscal packages in addition to the AED 16 Billion stimulus announced by the UAE cabinet for all seven emirates. In total, the combined size of all the encouragement programmes now exceeds AED 120 Billion.

Dubai has been recently awarded a “Safe Travel Certification” from the World Travel and Tourism Council and the UAE also ranks third in COVID-19 testing per one million of population. With the gradual reduction of the lockdown, continued government stimulus and with the upcoming Expo in 2021, many economists are of the view that the UAE economy will surely be revived by 2021. Additionally, the report of the IMF projects that the UAE economy will be able to recover by 1.3 percent by 2021.