It's reasonable to assume that as we struggle with the adverse impact of the COVID-19 pandemic, the past three to four weeks have been challenging for all of us worldwide. It is now commonly agreed that our main priority is to step in the direction of flattening the infection curve to control the spread of viruses without raising pressure on national healthcare services globally. If more research surfaces on the epidemiological appearance of the viruses, we are better able to cope with it and care for those affected.
There is no issue that the coronavirus pandemic will have many impacts on the world of industry and the economy. Most economies are already well in correction mode worldwide, with many already plunging into the depths of the bear market. As far as the UAE is concerned, the knock-on effects can currently be divided into the impact on goods, travel and tourism, and the impact on society in the Emirates.
Soon, a rapid downturn started in the economy, and unemployment soared. When a large number of the country's expatriates began to leave, the situation took a turn for the worse. Many businesses are announcing staggering losses and bankruptcy by the end of June. CNBC predicts that in the next six months, 70 per cent of companies would shut their doors.
Dubai recognised the severity of the situation at an early stage with the government of another nation and reacted proactively, was highly coordinated, technologically advanced, and was strategic in conducting operations in a phased manner. To handle the spread of the virus and flatten the curve, the government is taking every step required.
Dubai: A Diverse Economy
The main reason is that Dubai is among the Gulf's most diverse and non-oil-dependent economies and depends on entertainment, hospitality, logistics, tourism, real estate, and retail. The second reason is that the Emirate relies for its economic activity on its 80 per cent expatriate population. They will go back to their native nations if these expatriates can no longer find jobs. This population reduction could significantly deplete the consumer base essential for the Emirate to allow any economic recovery. By the end of May, over 150,000 Indian nationals and 40,000 Pakistani people had either left or applied to leave the UAE.
Impact on Companies in the UAE
It is reasonable that with the cancellation of events, training, conferences, local trading, closed airspace, businesses, particularly SMEs, have been severely affected. According to the UAE Ministry of Economy, the SME sector accounts for more than 98% of the total number of firms operating in the UAE. It leads to 52 per cent of the non-oil GDP.
Through the UAE government stimulus packages, industries in the Emirates were given generous help with the reduction in the cost of doing business from 25-98 per cent, to encourage and ease companies in investment, development, trade, export, import, and innovation, which have gone a long way to mitigate the effects. The government agencies have also established a central forum to apply for employment on the Virtual Labour Market Portal for residents of Emirates located in the UAE holding a residency visa and who are unskilled as a result of COVID-19. Employers requested to publish their vacancies to UAE residence visa holders on this platform with vacancies ring-closed.
Impact on the Economy in the UAE
It is noted that as the nation looks forward to EXPO 2020 in October 2020, which has now halted to 2021, the UAE was also one of the most economically affected. In addition to the economy, the coronavirus pandemic in the UAE is affecting oil, tourism, and capital markets.
Oil is the critical export commodity of the countries of the Gulf Cooperation Council, and prices dropped sharply this week after the failure of OPEC and its allies to strike an output-cutting deal. The virus has significantly aggravated the demand shock of a business that has challenged the global slowdown. The strategy now appears to be changing from sustaining a defined price level through operational cuts to competing with producers such as Canada and the USA for market share who can not profitably extract at these lower prices.
The UAE has always been the world's go-to venue for travel and tourism. Globally, visitors have drawn by the skyline towers, state-of-art facilities, and shopping sites. The airline industry is going through losses owing to a full travel ban and the suspension of flights. It is a vital part of the UAE economy that will take a hit, with worldwide travel almost likely to be seriously disrupted well into Q2 of 2020.
A Government Economic Bailout Package
The Dubai government proposed an economic stimulus of 1.5 billion dirhams ($408 million) to increase liquidity and soften the impact of virus lockdowns to curb further losses. A collection of fee refunds, reductions, and reduced utility expenditures is included in the financial plan.
The UAE’s central bank also deployed a $70 billion fiscal package to help commercial banks provide small and medium-sized companies with debt relief. However, because of the uncertain outlook for recovery, many companies still need added funding and are unwilling to take on new debt.
The government of Dubai enforced two months of gruelling lockdown along with the rest of the country. It is said that the lockout steps imposed are some of the world's strictest. Dubai residents have forced to apply for permission from the police to leave their homes.
Dubai Economy says government-led economic reforms and investments, strengthened trading partner growth prospects, and preparation for hosting Expo 2020 provide the basis for increased credit and investment in the private sector in Dubai.
In October, November and December, Expo 2020 at the Dubai Department of Economic Development will improve tourism, food and beverages, and hospitality.
Their drive and focus are to open up new export markets and goods, dealing with new networking by sea and by air. Compared to the global scenario, Dubai's economic growth will take into account trade, and our major trading partners' economies will also expand.
With its Contribution to the GDP coming from 20 industries, Dubai already enjoys an immensely diversified economy. To accommodate 20 million visitors anticipated during the six-month-long event, Expo 2020 has spurred significant investment and infrastructure growth in the emirate. It will undoubtedly have a beneficial influence on all of the current industries. The Dubai Expo is a powerful magnet for attracting and converting short-term opportunities into successful business investments in the long term.
Dubai Economy is currently seeking to establish new growth drivers and initiatives to draw investment in new creative sectors from the private sector and extend to regional and global markets.
How is Dubai’s economy now, after Covid?
UAE has been growing at a rate of 5-6.2% in 2022, whereas Dubai on the other hand grew by 4-5%.
What is Dubai’s estimated growth rate in 2022?
Dubai's economy is growing at 4-5% in 2022.
How much has Dubai's economy progressed in 2022?
In 2022 Dubai has received $4.3 Billion in form of FDI. This goes on to prove that the economy of Dubai is growing well.