Stock Abu Dhabi skyline
The UAE economy is on course for recovery in 2021 according to according to First Abu Dhabi Bank’s chief economist Simon Ballard Image Credit: Ahmed Ramzan/Gulf News

Abu Dhabi: Economies recovering from the pandemic will most likely take a U-shape growth trajectory instead of a quick return, according to First Abu Dhabi Bank’s chief economist Simon Ballard. 

“It is FAB’s base-case scenario - that is the most sustainable path for recovery and the most healthy path rather than a V-shaped recovery that would require us to relax many of the restrictions put in place," said Ballard. “If we get a second major spike, my concern is that with interest rates of zero, there’s very limited scope for central banks and government to react.”

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Bounce back

Ballard said the UAE’s non-oil economy was starting to see positive signs after the big falls witnessed during the first-half of the year, and in particular during the second quarter. “We think that we are going to see growth in 2021," he said. "The delay of EXPO 2020 for example, disappointing perhaps at the time, [will be] highly positive in the long-term.

“That will create long growth during the course of early 2021 before the EXPO in the third quarter. At the same time, as we start seeing more viable vaccine opportunities, that will put us into a position to rebound.”

Real estate

Commenting on the outlook for real estate, Ballard said it was most likely that commercial properties would recover quicker. “Residential real estate will perhaps lag, and as far as retail is concerned, that will lag until we see a more significant return to tourists coming in," he added. "The local population can only spend so much, we need tourism to come and drive consumption.”

The change in working habits, such as working from home, will also be a factor in keeping commercial real estate prices down. “There maybe a reluctance or a reduced need for us all to move into 100 per cent occupancy of our office spaces. That will naturally damped demand, which will limit the recovery of prices.”