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UAE’s revised economic outlook to contract by 6.6% in 2020: IMF

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economy will recover by 1.3 percent next year

The UAE economy is forecasted to contract by 6.6 percent as a result of the coronavirus pandemic in 2020, according to a revised International Monetary Fund (IMF) report. The economy, however, will recover by 1.3 percent in 2021.

The IMF in its World Economic Outlook report issued in April had forecasted a 3.5 percent contraction for 2020 and a 3.3 percent growth in 2021 for the UAE.

Khatija Haque, chief economist at Emirates NBD Research, predicts that the Gulf economy’s GDP growth to rebound in 2021, given the pandemic is contained and a vaccine is available in the first half of 2021.

Khatija Haque told the media, “However, most governments in the region are likely to prioritise deficit reduction over growth, which could weigh on a recovery even as the external environment improves.”

The central bank of UAE last month forecasted that the country’s gross domestic product (GDP) will contract by 5.2 percent this year as a result of the pandemic. The UAE’s GDP contracted by 7.8 percent during the second quarter compared to a contraction of 0.8 percent during the first three months of 2020.

In the Quarterly Economic Review for 2020, the central banks said, “As a regional trade, tourism and transportation hub, the UAE economy was hit by the general ban on travel, while manufacturing production shrunk due to supply chain disruptions, limited export opportunities and subdued domestic demand.”

For the greater Middle East and North Africa (MENA) region, the IMF projected a 5 percent contraction in 2020 and a 3.2 percent growth in 2021.

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