The UAE’s GDP is estimated to shrink by 6 percent this year due to the coronavirus pandemic, higher than the previous forecast of 5.2 percent, the central bank said. However, the UAE’s GDP is expected to grow by 2.5 percent in 2021. The pandemic, along with lower oil prices has taken a toll on the UAE’s economy.
The central bank said in its quarterly review, “Economic activity in the UAE recovered partially in the third quarter, albeit the bounce back remained fragile. CBUAE projected real total GDP growth for the year 2020 to be around -6 percent, with the real non-hydrocarbon GDP projected to decline by around 5 percent. For 2021, CBUAE foresees real total GDP to grow by 2.5 percent and non-hydrocarbon real GDP by 3.6 percent. However, economic projections include exceptional uncertainty amidst COVID-19 repercussions and are thus subject to revisions.”
The CBUAE further said that as an oil-exporting country, the UAE is likely to feel the fallout from reduced global demand for oil due to the contraction of economic activities worldwide, including transportation and international travel.
Earlier this year, the World Bank forecasted the UAE’s economy to contract by 4.5 percent this year due to the coronavirus pandemic and the lockdown measures introduced to counter it. The World Bank said UAE’s economy will however pick up next year and will grow at a rate of 1.4 percent.
The Global Economic Prospects 2020 report by World Bank projected a 4.2 percent contraction for the wider Middle East and North Africa (MENA) region in 2020 and 2.3 percent growth the year later.