UAE braces for gradual recovery, but COVID-19 is at risk of darkening …
DUBAI, Sept.30 (Reuters) – The UAE is expected to experience a gradual economic recovery, in part thanks to its strong response to the coronavirus crisis and a rebound in tourism, the International Monetary Fund said, but the risk of a pandemic resurgence clouds the outlook.
The Gulf’s second-largest economy suffered a deep recession last year as the brakes against the COVID-19 pandemic hurt vital sectors such as trade and tourism, while record oil prices weighed on markets. oil revenues.
The IMF estimated a 6.1% contraction in gross domestic product in 2020, but said the recovery had started to gain momentum.
“A gradual recovery is expected in 2021, supported by the early and strong health response of the United Arab Emirates, the pursuit of supportive macroeconomic policies and the rebound in tourism and domestic activity linked to the postponement of Expo 2020, which is scheduled to start in October, “the IMF said in a statement. statement Thursday.
Last week, the UAE’s central bank said it expected economic growth of 2.1% this year, with non-oil growth of 3.8%.
The IMF said non-oil GDP growth could exceed 3% this year and higher crude production would support the oil sector, while higher oil prices would increase fiscal and external balances.
“Nonetheless, the uncertainty surrounding the recovery remains globally and in the UAE, and the overall risk balance is tilted down, with a resurgence of the pandemic being the main source of risk to the outlook,” said he declared.
The liquidity of the UAE’s banking system remains strong, but banks’ asset quality has weakened and a further impact of the crisis on their balance sheets could still occur, the IMF said.
The Gulf state’s political responses to the crisis are appropriate, but going forward, support should increasingly be targeted to those who need it most, he added.
The UAE has recently stepped up the pace of reforms aimed at attracting skilled professionals and boosting trade and foreign investment. These measures must be prioritized and sequenced to ensure efficiency and inclusive growth, the fund said.
(Reporting by Davide Barbuscia; Editing by Clarence Fernandez)
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