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Tue 5 May 2020 09:36 AM

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Too early to forecast impact of coronavirus on UAE economy, says Central Bank

The real GDP of the UAE grew 1.7 percent in 2019, according to newly released statistics from the UAE Central Bank

Too early to forecast impact of coronavirus on UAE economy, says Central Bank

Central Bank said that a variety of factors – in both the hydrocarbon and non-hydrocarbon sectors – are contributing to uncertainty about the economic outlook for this year.

It remains too early to forecast what the economic impact will be on the UAE’s economy, according to the UAE Central Bank.

The real GDP of the UAE grew 1.7 percent in 2019, according to newly released statistics from the UAE Central Bank.

In its 2019 annual report, the Central Bank estimated that the UAE’s hydrocarbon sector grew 3.4 percent in 2019.

“However, non-oil activities advanced at a soft pace, growing by 1 percent,” the report noted. “As a result, overall real GDP is estimated by FCSA [Federal Competitiveness and Statistics Authority] to have grown by 1.7 percent in 2019,” the report noted.

In the report, the Central Bank said that a variety of factors – in both the hydrocarbon and non-hydrocarbon sectors – are contributing to uncertainty about the economic outlook for this year.

“The spread of Covid-19 is expected to impact trade and supply chain movements, coupled with travel restrictions which paves the way for high volatility in capital markets and commodity prices,” the report added. “While the outbreak is expected to negatively affect the global and domestic economies, it is still early to gauge the scale of the economic fallout.”

In 2019, the Central Bank noted that the “fading effect” of value-added tax, the appreciating dirham, lower energy prices and a decline in rents pushed inflation into negative territory.

“However, the employment rate registered a steady rebound,” the report added. “Looking ahead, the economic outlook for 2020 remains uncertain owing to the Covid-19 outbreak.”

In remarks marking the release of the Central Bank report, Chairman Hareb Al Darmaki said that the Central Bank’s focus has largely been on supporting local businesses and protecting consumers.

“To support the UAE’s long-term economic development, we continuously reassess our strategic objectives and focus areas to align with the government’s agenda,” he said. “In 2019, the CBUAE, in collaboration with the UAE Banks Federation and several national banks, launched the National Loan Scheme aimed at easing the burden of debt accumulation for UAE citizens.”

“During the year, the CBUAE also proceeded to facilitate a Consumer Protection Committee under the aegis of UBF,” he added.

Additionally, Al Darmaki said that the Central Bank is increasingly working to encourage Emirati talent in the banking sector.

“As talent is crucial to the sustainable development of a banking and financial system and as capacity building of the UAE’s banking sector remains one of our top priorities, we introduced in 2019 a points-based system of encouraging the banks operating in the UAE to promote Emiratisation,” he added.

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