The impact of Inflation and Recession in the UAE
Dark clouds of an economic slowdown and inflation have been looming over the world economy as the IMF predicts the global growth is expected to decelerate from 6.0% in 2021 to 3.2% & 2.7% in 2022 & 2023 respectively. Since the UAE is interconnected seamlessly with the global market (both in the East and the Western worlds), the effects of a global slowdown will be felt in the UAE as well.
It is not all doom and gloom as the UAE economy is expected to shrug off the effects of the economic slowdown thanks to the impressive global oil prices & good performance of non-oil sectors in the UAE such as hospitality, tourism, real estate and logistics.
According to the Khaleej Times, the UAE economy remains on track to record a stable Gross Domestic Product (GDP) growth of around 5%, which is higher than the global growth rate for 202 and the Central Bank of the UAE pegged the real growth output at 3.9% for 2023. Monica Malik, chief economist at Abu Dhabi Commercial Bank, assured that the UAE economy will remain on track to achieve sustainable growth for the subsequent years.
The good news is that the prudent approach of the Government of the UAE has ensured the ability the impact of global inflation and slowdown-
Infrastructure investments
The UAE government has shown faith and continued to invest in infrastructure projects, such as the expansion of Dubai’s airport, opening of new Special Economic Zones etc to maintain economic growth and create jobs.
Attracting foreign direct investment
The UAE has made efforts to attract foreign investment by offering favorable tax policies, streamlined regulations, and a business-friendly environment. The easing out of the Visa process for foreign nationals has also been a step aimed at inviting more small to medium scale businesses to the UAE.
Diversification of Industries
The UAE has been working to diversify its economy away from reliance on oil exports and towards other industries such as tourism, real estate, and financial services. With their continued investment in a variety of other sectors, the infrastructure that had already been laid is serving them well in these tough times.
Stimulus packages
Like any prudent and proactive government, the government of UAE has also introduced a series of stimulus packages to support businesses and households during the economic downturn, including financial aid, loan guarantees, and tax reductions.
Overall, the UAE has taken a proactive approach to absorb the impact of global inflation and recession and maintain economic stability. These efforts have helped to mitigate the impact of these challenges on the economy and support continued growth.