UAE’s GDP contracted 7.7% in 2020

The UAE’s economy might have contracted by as much as 7.7 per cent in 2020, the steepest decline estimated for the GDP so far, with the core economic sectors --- the hydrocarbon, tourism and retail sectors --- arguably among the most affected by the pandemic, a leading global consultancy company said on Sunday.

In its “UAE Market Review and Forecast 2021” report, Knight Frank said that such “a seismic shock” would also go on to have major impacts on global economic activity, where it is estimated that global GDP decreased by 3.5 per cent in 2020.

The estimate of the UAE’s economic contraction in 2020 by the Institute of International Finance on Friday has been less dismal at 5.7 per cent as compared to Knight Frank’s.

However, despite this shock, the UAE’s “commendable handling of the pandemic and fiscal and monetary stimulus plans have seen recovery ensue in these and other sectors,” Knight Frank report said.

Looking ahead, the UAE’s GDP is forecast to expand by 1.1 per cent in 2021 and by 4.0 per cent in 2022, Knight Frank said quoting data from Oxford Economics. “During this period, GDP growth rates between Abu Dhabi and Dubai are initially expected to fragment, where Abu Dhabi and Dubai are expected to record growth rates of 1.6 per cent and 5.4 per cent in 2021, before converging to 5.3 per cent and 5.0 per cent in 2022 respectively,” Taimur Khan, associate partner at Knight Frank Middle East, said.

“As the Covid19 pandemic raged, we saw social mobility norms curtailed in a manner never experienced before. Almost uniformly, the world came to a standstill, with flights grounded, businesses shuttered and curfews enacted in large swathes across the world,” said Khan.

The IIF report argued that the UAE had limited the health impact of the pandemic thanks to its relatively young population and a range of containment measures which have mitigated the spread of the virus and the number of deaths.

issacjohn@khaleejtiems.com