Recently there have been some reports of the UAE economy slowing down, the markets being in a slump and being impacted by the global trends. How much of this is based on fact and how much is an exaggeration? Also if there is, in fact, an economic downturn, what is being done about it?
At the end of 2018, Dubai’s stock market reported a 25% annual loss. The tourism and real estate sectors slowdown is thought to be the main reason for this. The real estate sector has witnessed a higher supply compared with the demand. The deteriorating global economy is seen to have a negative impact on UAE markets as well.
While the Dubai stock exchange fell, the Abu Dhabi stock exchange rose by about 10%. While, there is likely to be an economic slowdown across North Africa and the Middle East, UAE is still expected to be the best performer of the region. It is expected that the economy of Saudi Arabia is likely to slowdown in 2019, while the UAE economy will grow at about 3.5 %.
The fall in global crude prices did slow down growth, however, a slew of policy changes is likely to increase the country’s GDP. The regulations are aimed at the nation’s 70% non-oil sector, which may see a growth of up to 4.2% in 2019 according to a Central Bank of UAE forecast.
According to reports, the government has approved changes in the law governing FDI, which is likely to boost investment inflows into the UAE. A senior Middle East economist at Oxford Economics was quoted as having said, “Expansionary fiscal policy at the federal and emirate levels, continued investment ahead of Expo 2020, improving tourism, government stimulus plans, reforms and rising inflows of FDI.”
Companies receiving fine exemptions, lowering corporate charges, creating regulations to increase ease of doing business and scrapping up to 19 aviation-related fees are some of the policy changes. Creating as many as ten thousand jobs and a three-year Dh50bn stimulus package will help attract talent and reduce the cost of doing business will help stimulate the economy.
According to a Bloomberg report, the UAE’s program aimed at reducing debt burden of the citizens will help to counter the economic slowdown. People who are paying 50% or more of their salary or pension towards debt repayment will get relief.
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