The UAE's economy will continue to improve this year, driven by higher oil prices, a rapid Covid-19 vaccination campaign and a services sector rebound, according to Abu Dhabi Commercial Bank.
A strong rebound in economic activity is expected in the second half as global travel restrictions are eased, the lender said in its latest UAE economic report titled The road back to normal – a year of two halves.
“The next phase of the UAE’s recovery will be vaccination-led, allowing for a return in consumption back towards services,” the report said.
“We see strong pent-up demand, especially related to leisure-related tourism, as witnessed at the end of 2020, which would be magnified when health concerns retreat.”
The UAE moved quickly to limit the fallout from Covid-19 and introduced economic support packages worth Dh388 billion ($105.6bn), Minister of Economy Abdulla bin Touq said in December.
More than 345 million vaccines have been administered in 121 countries at a daily rate of 8.74 million doses, according to Bloomberg's vaccine tracker. The UAE was in third place on Saturday – after Israel and the Seychelles – with a daily rate of 60.1 shots administered for every 100 people.
ADCB expects the recovery of the country's services sector to become more evident in the second half, particularly in the final quarter, owing to more widespread global vaccinations, Expo Dubai 2020 and more favourable weather.
International travel demand is set to improve as people travel from the UAE to tourist destinations, the bank said. However, business travel is expected to lag behind.
A recovery in the “external-facing” services and an increase in the country's population are poised to boost other areas such as retail.
The UAE’s trade and logistics sector is on track to benefit from stronger demand for physical goods in the first half.
Online shopping growth, strong Asian export volumes and lockdown restrictions introduced this year in Europe could lead to “buoyant East-West trade momentum” in the first quarter, ADCB said.
Personal protective equipment demand, global vaccine campaigns and the extension of accommodative economic policies are expected to support the trade and logistics sector.
In terms of domestic economic activity, ADCB expects a “modestly expansionary” fiscal stance this year that is supported by the recovery in oil prices.
The lender forecast that the deficit will narrow to 1.1 per cent of gross domestic product as higher oil revenue offsets an increase in expenditure.
Crude benchmarks Brent and West Texas Intermediate are about 30 per cent higher than they were when the year began.
Employment is set to increase gradually in sectors such as aviation and hospitality as business activity recovers, the report said.
However, jobs lost across various sectors of the economy are unlikely to return soon as companies have become more efficient, cut costs and hastened digitisation.
Important tourism source markets such as the UK and Saudi Arabia are not expected to ease their international travel restrictions until mid-2021, which may delay the sector's recovery during the summer.
The aviation industry could improve at a quicker pace than the local hospitality sector as tourists from the UAE and the wider region travel over the summer.
However, tourism is on track to make significant strides in September as the country prepares for the Expo in October, the report said.
This should also drive demand for short-term rental contracts from the end of this year into 2022, the report said.
Looking forward, ADCB said project and investment activity will be largely driven by the oil, rail transport and utility sectors.
Its outlook for Abu Dhabi remains strong, due to the emirate's multi-year hydrocarbon investment plan.
The UAE economy is poised to grow by 2.5 per cent this year and by 3.6 per cent in 2021, according to the UAE Central Bank.
Tank warfare
Lt Gen Erik Petersen, deputy chief of programs, US Army, has argued it took a “three decade holiday” on modernising tanks.
“There clearly remains a significant armoured heavy ground manoeuvre threat in this world and maintaining a world class armoured force is absolutely vital,” the general said in London last week.
“We are developing next generation capabilities to compete with and deter adversaries to prevent opportunism or miscalculation, and, if necessary, defeat any foe decisively.”
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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1. Fasting
2. Prayer
3. Hajj
4. Shahada
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Name: Hassan Mohsen Elhais
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How to register as a donor
1) Organ donors can register on the Hayat app, run by the Ministry of Health and Prevention
2) There are about 11,000 patients in the country in need of organ transplants
3) People must be over 21. Emiratis and residents can register.
4) The campaign uses the hashtag #donate_hope
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Traits of Chinese zodiac animals
Tiger:independent, successful, volatile
Rat:witty, creative, charming
Ox:diligent, perseverent, conservative
Rabbit:gracious, considerate, sensitive
Dragon:prosperous, brave, rash
Snake:calm, thoughtful, stubborn
Horse:faithful, energetic, carefree
Sheep:easy-going, peacemaker, curious
Monkey:family-orientated, clever, playful
Rooster:honest, confident, pompous
Dog:loyal, kind, perfectionist
Boar:loving, tolerant, indulgent
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Capernaum (Lebanon)
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Roma (Mexico)
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