The UAE’ central bank stood by its forecast for a return to growth in 2021 after lower crude prices and pandemic restrictions hit the Arab world’s second-largest economy.
“Economic activity is still subdued but recovering,” governor Abdulhamid Saeed Alahmadi said. The government will continue to diversify the economy, fund infrastructure improvements and encourage private investment, he said.
In December, the bank forecast growth of 2.5% in 2021.
Utilisation of a stimulus programme of capital and liquidity measures to help the economy through the global health crisis has fallen to about 50% of its peak, he said, indicating “that banks are now gradually coming back to manage their credit books and navigate the way forward.”
The nation’s lenders and financial institutions reported “encouraging” results last year showing resilience in the banking system, the governor said. Gross assets, deposits and lending all increased marginally in 2020.
The governor also said:
n The central bank has approved banks’ requests for more than 15bn dirhams ($4.2bn) in dividends.
n Consumer confidence returned to normal in December, though employment rate rose 1.7% from November.
n The central bank and the government stand ready to help businesses.
The International Monetary Fund predicts the economy to rise 1.3% this year after having contracted an estimated 6.6% in 2020.
The UAE has rolled out an aggressive inoculation programme and aims to vaccinate 50% of its 10 million population by the end of March.
“The rapid pace of vaccination is a great comfort,” the governor said.
Dubai business activity barely grows with virus restrictions reimposed
Non-oil companies in Dubai increased output for the second month in a row in January but the uptick was marginal in the emirate where authorities have reimposed some restrictive measures imposed to curb the spread of Covid-19.
The non-oil private sector economy in the Middle East’s business hub improved fractionally last month, according to IHS Markit. While its Purchasing Managers’ Index fell to 50.6 in January from 51 last month, driven by a decrease in output and new orders, the gauge still remained above the 50 mark that separates growth from contraction.
Employment figures in Dubai showed an uptick for the first time in about a year, and at the quickest pace in 14 months as companies expressed optimism towards future business. The overall employment indicator was still below the 50 mark.
“Despite sales growth near-stalling, non-oil companies in Dubai increased output for the second month in a row in January,” wrote David Owen, economist at IHS Markit. “With confidence for 2021 also improving due to the rapid vaccine roll-out in the UAE, employment rose for the first time in nearly a year, after the pandemic drove record declines during the second quarter of 2020.”
A man registered for receiving a dose of vaccine against the coronavirus at a vaccination centre at the Dubai International Financial Center in Dubai on February 3. While Dubai’s Purchasing Managers’ Index fell to 50.6 in January from 51 last month, driven by a decrease in output and new orders, the gauge still remained above the 50 mark that separates growth from contraction.
