Expo 2020 will be the ‘vaccine’ that UAE economy needs for its return to full growth
Six-month Expo run could add a stellar 1.8%+ to UAE’s GDP numbers
Dubai: After an additional year of waiting, the EXPO 2020 Dubai is finally on – so, what sort of boost to the UAE economy will the six-month extravaganza have to offer?
Yussufali M.A., the billionaire Chairman of LuLu Group, will not be drawn into numbers and forecasts, but said simply: “As far as the UAE economy and especially the retail sector is concerned, Expo 2020 is the vaccine we have been looking forward to. This event – and a global one at that –will open doors to a whole new world of opportunities and investments in multiple sectors.
“The entire world appreciates the steps taken by the Rulers in combating the pandemic and creating a safe environment for residents - and visitors. Like everyone here, I am waiting to receive the world and show them the true spirit of Dubai and UAE.”
Already filtering in
The gains are already showing up, in certain sectors initially and then filtering down to the rest as the event – and everything that will be happening in the UAE - builds up steam. Hotels have already reported a pickup in bookings, while airlines are the other beneficiary. But the benefits will run deeper – just give it time.
Simon Ballard, Chief Economist - Market Insights & Strategy at FAB Global Markets, definitely has a number on the likely impact the Expo will provide the local economy. "We believe that a successful six-month event will contribute up to +1.8 per cent annualised to UAE GDP. [The] Expo will add to the already strong allure of the region and help bolster long-term foreign direct investment (FDI) flows."
"We remain constructive in our outlook for UAE GDP growth this year and in 2022. From the economic contraction of around 6 per cent in 2020, we now expect the UAE to register real GDP growth of at least 2.4 per cent this year and then a GDP expansion of 3.8 per cent in 2022."
“[The] robust job creation that results from Expo 2020 will be a key contributor to economic growth at a time when the global economy is in the ongoing process of recovery and reflation from the pandemic.”
Now, the time is ripe for revival, for new questions to be asked – and answers sought. Abdulfattah Sharaf, CEO at HSBC UAE and Head of International Markets, says it succinctly: “I encourage everyone to use the experience of Expo 2020 to ask big questions with the potential to shape the future and to use the inspiration of the next six months to really help change the world. The scale of vision and ambition encapsulated by Expo 2020 sits well in the UAE - and we’ve been supporting it since 1946 when we opened the first and only bank here.
“We saw the potential ahead and we invested. We’ve been investing ever since, growing with the country and building the bank from a single branch beside the Dubai Creek into our biggest business in the Middle East. We know that big ideas open up a world of opportunity.”
Crowds are back
Dubai and the UAE are guaranteed the high visibility that hosting a world Expo offers. But turning that exposure into longer term new growth opportunities is what the Government will hope for. This, at many levels, will also compensate for the dire nature of the challenges set off by COVID-19 and whose ripples continue to be felt.
Aarthi Chandrasekaran, Senior Vice-President - Fund Manager at Dubai-based Shuaa Capital, draws a parallel with the recent Tokyo Olympics and what hosting it would have meant for the city and the country. But with one important point of difference.
“With pent up demand for travel increasing this year, the Expo 2020 will be first global mega-event with visitors - as Tokyo Olympics and Paralympics had no spectators,” said Chandrasekaran. “We expect this to translate to significant footfalls into the UAE, especially after two-third decline in international arrivals in 2020.
We expect GDP growth to strengthen in the UAE in H2-21 driven by higher oil production as oil cuts start to unwind as well as higher consumer spending seen from Expo 2020.
“With 191 participating pavilion in Dubai Expo 2020, it looks much grandeur compared to Milan Expo 2015, where roughly 145 countries participated, drawing 20 million visitors.”
All in the numbers
Dubai has set sights on bettering that number – and then some. The figure mentioned is 25 million. Whatever the Expo visitor numbers will be by end of business March 31,2022, there are far greater dynamics at work here. It resets the UAE economy for a post-COVID-19 revival – a process that could have taken longer if the Expo had not been there.
"We see the Expo as a means to catapult the country’s formidable case for a revival in the economic, commercial, and tourism arena, thus strengthening the UAE's position globally," said Michael Davis, CEO of NMC Healthcare. "The Expo 2020 is an opportunity for countries to look at avenues of collaboration for economic stimulus - while we celebrate the resilience of the UAE in hosting the world during such unprecedented times."
Reconnecting
For Javed Malik, President of the Diplomat Business Club, the Expo is about taking the measured steps towards full normalcy. "I wouldn't say the people [of the world] have moved on from the pandemic," he said. "But they are a little bit more willing to engage than they were perhaps a year ago. The Expo has definitely played a positive role in that."
“The credit goes to the government once again for having one of the best vaccination programmes in the world,” said Malik, who was a former Pakistan Ambassador.
So, what will it be? A slow build up of confidence that the future is about hope, of growth, and distancing from the year of the Covid. The Expo 2020 will be a good place to start.