Stock - UAE Economy
Image Credit: Ahmed Ramzan/Gulf News

The UAE economy has convincingly bounced back from the pandemic impact faster than expected with the help of plenty of measures to beat the virus and boost the economic recovery including an effective vaccination drive.

One of the successful measures is the Targeted Economic Support Scheme (TESS), introduced by the Central Bank of the United Arab Emirates (CBUAE) at the height of the coronavirus outbreak last year, to helps banks provide temporary relief to companies and individuals affected by pandemic and facilitates additional lending capacity through the relief of existing capital and liquidity buffers.

These measures helped in creating a stable and confident economic environment that saw the UAE recover faster than most countries in the world. The country has been buzzing with economic activities since the third quarter of last year, with Expo 2020 being the highlight of these activities.

And as the recovery gained momentum, the CBUAE extended its stimulus programme, replacing the measures it put in place earlier to minimise the immediate impact of the pandemic with more targeted policies aimed at supporting the economic recovery.

The UAE economy is expected to grow at a convincing 2.1 per cent this year, thanks to these measures, according to the CBAUE. It is also projected to grow at an impressive 4.2 per cent in 2022. The recovery is the result of the sound monetary policies and of course the health preventive policies including a remarkable vaccination campaign that saw more than 91 per cent of the population fully vaccinated, the highest rate globally.

The recovery nevertheless needs to be protected. With the emergence of a new Covid-19 variant, Omicron, there is an air of uncertainty casting an unwelcome shadow over the earlier prevailing sense of euphoria worldwide. Global markets, for example, closed in the red on Friday as central banks sent mixed messages on their measures going forward. The World Health Organisation said at the weekend that it expected Omicron to replace Delta as the dominant variant this winter.

While the UAE is in a comfortable place to handle the new strain, the CBUAE is keen to ensure the economy continues its solid growth. On Saturday, therefore, it announced that it was extending its stimulus programme, TESS, until the end of 2022 “to support new lending and financing, as well as prudential relief measures regarding banks capital buffers and liquidity and stable funding requirements.” A prudent and important move.

The Banking Federation had earlier said the UAE banks are in a strong position, projecting a growth of assets between 8 per cent and 10 per cent next year as the economy continues to recover.

With the new announcement, the banks will continue to be eligible to access the collateralised Dh50 billion zero-cost liquidity facility until 30 June 30 next year. With the Omicron uncertainly growing worldwide, the CBUAE’s decision will ensure that the UAE economy is not affected and will continue its firm growth.