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Wed 10 Jun 2020 03:58 PM

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UAE Central Bank forecasting fourth quarter economic recovery

Bank expects country's non-oil economy to dip by 4.1% in 2020 as a result of Covid-19 pandemic

UAE Central Bank forecasting fourth quarter economic recovery

The UAE Central Bank is predicting a sharper slowdown in the country's non-oil economy in the second quarter before a gradual recovery through the rest of the year

The United Arab Emirates expects its non-oil economy to contract 4.1 percent this year due to the coronavirus pandemic, with a sharper slowdown in the second quarter before a gradual recovery through the rest of the year, the central bank said on Wednesday.

Actual performance will depend on government support measures and the successful containment of the virus, it said.

Forecasts for 2020:

  • Fiscal growth will average about 28 percent, corresponding to the projected stimulus to counter Covid-19.
  • Credit expansion to slow in the second quarter, followed by a gradual recovery.
  • Property prices seen declining with a sharper drop in the second and third quarters, before moderating in the last quarter.
  • A drop in employment is expected in the second and third quarters, with a recovery in the fourth.
  • Economic sentiment may drop further but is likely to moderate with the projected recovery in the last quarter, reflecting improving sentiment and preparation for the Dubai Expo in 2021.
  • Foreign investment is also assumed to fall, from 8percent growth between 2017 and 2018, due to deterioration in sentiment.

The IHS Markit Dubai Purchasing Managers’ Index rose to 46 in May from a record low 41.7 in April, remaining below the 50 mark that separates contraction from growth. Thanks to a relaxation of lockdown measures, output and new orders declined at a slower rate, while unemployment had the smallest drop in three months, according to a report on Tuesday.

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