The UAE’s economic outlook is robust, supported by low government debt, diversified revenue streams, good governance and strong macroeconomic management, said Mohamed Alabbar, whose business interests include e-commerce platform Noon, retailing business Americana and digital bank Zand.
“Global economic headwinds will have some impact on the economy and the businesses in the UAE, but these are within the manageable limits,” Mr Alabbar told The National on the sidelines of the dual listing of Americana’s shares on the Abu Dhabi Securities Exchange and Tadawul on Monday.
The experience of the UAE in containing the coronavirus pandemic-induced economic slowdown, managing the impact of supply chain disruptions and a global food crisis following Russia’s war in Ukraine has given the government and companies valuable lessons in dealing with adverse global events, he said.
“No one could predict how or when the pandemic was going to end. Everyone thought the war [in Ukraine] would be a short one. Now, we are talking about a global recession amid rising inflationary pressures. Crises do happen, but our ability to learn and navigate through these will determine our success,” Mr Alabbar said.
Businesses should always factor in crises and the only way to withstand unpredictable events is to build strong organisations with capable people to manage them.
“Businesses should always be alert and paranoid,” he said.
The UAE economy is in a strong position now with robust growth supported by both oil and non-oil sectors, low government debt and diversified income streams, Mr Alabbar said.
All the latest data support the strong rebound of the UAE economy from the pandemic-induced slowdown.
The UAE economy is set to grow by more than 6 per cent this year, after expanding by 3.8 per cent in 2021, the International Monetary Fund said in its latest forecast. An expansion of 6 per cent would be the highest since 2011, when the economy grew by 6.9 per cent.
The Emirates' economy expanded by 8.4 per cent in the first quarter of this year, exceeding initial estimates, as a result of higher oil prices and successful Covid-19 mitigation measures.
“A strong fiscal position supported by oil prices and the continued robust performance of key sectors such as trade, tourism and real estate adds to the business confidence in the country,” Mr Alabbar said.
Business activity in the UAE’s non-oil private sector economy continued to improve in November with the seasonally adjusted S&P Global purchasing managers’ index clocking 54.4, way above the neutral 50 mark that separates growth from contraction.
Mr Alabbar said there is an overall positive momentum in the UAE economy, supported by intense domestic activity in sectors such as real estate, tourism and trade, despite global macroeconomic headwinds.
The UAE's foreign trade for the first six months of this year exceeded Dh1 trillion ($272 billion), compared with Dh840 billion for the same period before the pandemic.
The tourism sector’s revenue topped Dh19 billion during the first half of this year and total hotel guests in the same period reached 12 million.
Growth in the number of hotel guests climbed 42 per cent, compared with the same period before the pandemic.
While the real estate sector has benefited from pent-up demand and strong foreign capital inflows, it is likely to keep up the growth momentum, Mr Alabbar said.
“Real estate is a simple business for both sellers and buyers as long as they don’t get carried away and do crazy things. This is the only merchandise in the world that will do reasonably well, if investors don’t go overboard with debt,” he said.
Global inflationary pressures will boost real estate investments as people have less choice in terms of where to invest their money and the markets stand to benefit, he added.
Mr Alabbar expects the overall positive economic outlook to drive up stock market valuations and the number of companies opting to list their shares.
There are a number of fundamentally strong companies in the UAE that have the potential to list their shares and it is an excellent opportunity for investors to become part of the success of these companies, he said.
While there are several local companies that qualify for listing, he said management should pay attention to their cash flows, business models, governance and capacity to deliver on promises before listing their stocks.
“[The] UAE has potential for many more stock market listings as equity culture is catching up with local investors and many serious international investors, both individual and institutional, are seeing growth opportunities in UAE equities,” Mr Alabbar said.
Americana shares, which listed on both ADX and Tadawul on Monday, closed 7.6 per cent higher on the ADX at Dh2.82 and 2.24 per cent up at 2.74 riyals on the Saudi market.
Americana has no immediate plan for geographical expansion as the company has huge potential to expand its business within the Middle East and North Africa and Kazakhstan, where it already has a footprint, Mr Alabbar said.
“Our region has a $35 billion business for fast service restaurants. We do only $2 billion. We have huge space to do more here. We have the right mix of people, technology and market knowledge. There is no reason now to look outside the key markets where we operate now,” he said.
The company will continue to invest in technology and people to enhance customer experience, Mr Alabbar added.
“Now, every business is about technology. We can’t ignore this critical component in reaching out to our customers. Technology and data management is a critical part of sourcing raw materials to food delivery and managing customer satisfaction.”