As the coronavirus pandemic persists, dealing the world economy its greatest crisis since the Great Depression in 1920s, the latest report by the International Monetary Fund (IMF) says the global economy continues to be in a deep recession although the situation is proving to be less drastic than initial projections.
And, although economies across the world will suffer massive contraction this year and possibly a modest growth next year, the UAE and other Gulf state seem increasingly positioned to fare better, as projections indicate a better than exacted recovery in 2021.
In its report, released earlier this week, the IMF says global output will fall by 4.4 per cent, an improvement by 0.8 per cent compared to the organisation’s June update. “This upgrade owes to somewhat less dire outcomes in the second quarter, as well as signs of a stronger recovery in the third quarter,” the report noted.
Sound economic planning in the UAE since the financial crisis and the rapid response in providing critical incentives and financial injection into vital sectors of the economy led to the stabilisation of the economy, which is expected to lead to a faster recovery in the year ahead
As a result of eased lockdowns and the quick implementation of financial support policies at “an unprecedented scale” by central banks and governments around the world, the global economy is coming back from the depths of its collapse in the first half of this year, the report noted. Nevertheless, the crisis is far from over, with rising unemployment that led more than 90 million people to fall into extreme deprivation this year, per IMF estimates. The pandemic will leave “deep and enduring scars caused by job losses, weaker investment and children being deprived of education.”
Pandemic and falling oil prices
Meanwhile, the Institute of International Finance (IIF) projects the UAE’s economy to turn around in 2021 with a 3.1 per cent GDP growth. For the Gulf Cooperation Council (GCC), the institute expects an average decline of 5 per cent in average GDP growth, especially with the current steep decline in oil prices and the continuing impact of the pandemic.
But the UAE has faced up to this double challenge from a position of strength. The sound economic planning since the financial crisis and the rapid response in providing critical incentives and financial injection into vital sectors of the economy led to the stabilisation of the economy, which is expected to lead to a faster recovery in the year ahead.
Another report released during the week, by the Abu Dhabi Department of Economic Development (ADDED), also confirmed these projections, noting that the Abu Dhabi growth next year is expected to be at 5 per cent. “We will be the fastest growing and recovering [economy] in the Arab world and ranked 25th globally, so the recovery that we are going to go through is very strong,” according to Rashid Al Blooshi, undersecretary at ADDED.
As the outbreak looks to be firmly contained in the country, with the recovery rate exceeding on daily basis, the UAE is well positioned to ride out the storm.