Dubai’s economy is forecast to expand 4 per cent in 2021 driven by its effective response in protecting lives and livelihoods from the impact of Covid-19 and countering a pandemic-driven economic slowdown, according to government projections.
Strong economic fundamentals of Dubai, the commercial and trading hub of the Middle East, and the pandemic-delayed Expo 2020 in October to next year, have also provided the bedrock for a quick rebound, the Dubai Media Office said in a statement on Wednesday.
The expansion next year, however, will follow a an estimated 6.2 per cent economic contraction in 2020, the media office said. The emirate’s economy shrank 10.8 per cent in the first half of the year, on the back of the massive shock of unprecedented global and local measures to contain Covid-19, it said.
Dubai has taken measures to support businesses and individuals, launching four stimulus packages worth Dh6.8 billion ($1.85bn), to help offset the shock of the pandemic and the fallout in the form of job losses and disruption to businesses.
Packages rolled out between March and October this year addressed the demand side, covering consumption, investment, trade and travel sectors, as well as on the supply side including the workforce, supply chains and cutting the cost of doing business in the emirate.
"Our leadership’s directives were focused on ensuring that the short-term impact of the Covid-19 pandemic does not translate into a long-term economic hardship that would inflict lasting damage on people and businesses by way of job losses and bankruptcies," Sami Al Qamzi, director general of Dubai Economy, said.
“This has paved the way for Dubai to be one of the very first cities to gradually reopen its markets and businesses.”
Dubai’s growth projections follow the Central Bank of the UAE's estimate of a 2.5 per cent expansion of the country's economy next year. The rebound of the Arab world's second largest economy in 2021 will be led by a 3.6 per cent acceleration in the non-oil sector, according to the regulator’s third quarter economic review.
Overall economic packages and initiatives by the federal and local governments since the outbreak have reached more than Dh388bn.
The Covid-19 pandemic has tipped the global economy into its deepest recession since the 1930s. In October, however, the International Monetary Fund revised its growth estimate upward to a contraction of 4.4 per cent, from an earlier 4.9 per cent contraction forecast.
The economic slowdown in the emirate, according to the Dubai Economy, is in line with the rest of the major economies across the globe.
The IMF expects the UK economy to shrink 9.8 per cent in 2020, the overall Eurozone to contract 8.3 per cent, Canada by 7.1 per cent, the UAE by 6.6 per cent and Saudi Arabia economic output to shrink by 5.4 per cent.
On Wednesday, Dubai began a free mass inoculation campaign with the Pfizer-BioNTech vaccine. The emirate opened up for tourism in July. However, global restrictions on travel during lockdowns and a subsequent slow pickup in demand has impacted the emirate’s hospitality and restaurant sector, which is projected to contract 20 per cent this year, according to media office estimates.
The transport and storage sector is expected to shrink 11 per cent, while the retail and wholesale sector is projected to contract 9 per cent, according to data by the Dubai Statistics Centre.
Arif Al Muhairi, executive director of Dubai Statistics, said the decline is within the “expected range of economic contraction, given the massive global economic impact of Covid-19, especially in the first half of the year”.
Financial services and insurance activities during the first six months of the year, grew 1.4 per cent, enhancing its contribution to the emirate’s economy to 11.5 per cent in the first half of the year.
“The banking sector in the country is in a strong position to face any future challenges,” Mr Al Muhairi said.
The “Future Foresight” projects by the government have also laid out the foundation for a rapid economic rebound.
“These efforts include investment in healthcare and food security that will not only reduce the likelihood of future shocks, but also contribute to enhancing the emirate's resilience against such shocks.” Mr Al Qamzi said.
The continued flow of local and foreign investments, whether from the government or private sector, are supporting Dubai’s efforts in achieving sustainable growth and a rapid transition to a knowledge-based economy, he said.
Steps including the launch of Nasdaq Dubai Growth Market in October, a Virtual Work Programme for overseas professionals and existing measures such as the golden visa will further accelerate the economic recovery.