In 2021, UAE enjoyed a robust economic finale thanks to the response received at the Expo 2020 Dubai. It was successful in rebounding tourism and economic growth in the region. Recent data from The Department of Economics and Tourism show that the number of international visitors in November rebounded to approximately 76% of its previous levels recorded in 2019.
Kavan Choksi on the economic outlook for 2022
According to business and finance expert Kavan Choksi, the predictions for the later half of 2022 is widely constructive. However, uncertainty still persists primarily due to the evolution of the coronavirus. The omicron variant is more transmissible and led to another surge of coronavirus infections across the globe. Travel restrictions were renewed, and lockdowns were announced in some regions in Asia and Europe.
Besides the tourism sector in the UAE, structural reforms incorporated by the government are creating headwinds in economic growth and boosting investment for the remaining months of 2022.
Reduction in the barriers to economic growth in the region
The significant reforms that are triggering growth are changes in the labor and personal laws, the expansion of longer-term visas to boost foreign investments, the legal permission to own 100% of onshore companies by foreigners, and the most recent of them all, the decision to balance the working week of the UAE with those of larger economies of developed nations. The above measures have the goal of reducing hindrances to investment and attracting financial capital investment into the UAE in the coming years.
Projections by The International Monetary Fund for UAE in 2022
The IMF projects that the economy of the UAE is expected to grow by about 4.2% this year, while the NBD Emirates forecasts economic growth of 5.7%. The Abu Dhabi Commercial Bank predicts a 6% expansion thanks to a sharp increase in the region’s oil sector.
Business and economic analysts expect there will be a potential more robust economic growth in the region this year because of the output of more oil, increasing prices in crude prices, and the initiatives taken up by the government to make the size of the manufacturing sector double its size by 2031, as per reports by the Central Bank.
The rise in the prices of oil
After the Russian invasion of Ukraine, the prices of oil have risen since February. Besides the above, The Central Bank reported recently that the banking system of the region is recovering, and the financial systems are more comprehensive compared to their pre-pandemic levels.
According to business and finance expert Kavan Choksi, the banking system of the UAE demonstrated tremendous resilience in battling the repercussions of the coronavirus pandemic. In addition to the above, the report states that the UAE government also played an active, supportive role in offering financial relief to affected businesses and households during the coronavirus pandemic.
The credit risks have improved in the region, and this has been reflected in the favorable rating revisions of a majority of banks in the area by agencies dealing with credit ratings. In the second half of 2021, lending increased, leading to a rebound in the later half of 2021 as business activities began to recover and coronavirus measures lifted.