What perspectives for the United Arab Emirates after COVID-19?
The UAE’s economy was hit by a double shock in 2020: the collapse in oil prices and the COVID-19 pandemic. According to preliminary estimates, the UAE’s economy shrank by 6.1% in 2020. However, the outlook is brighter for 2021. Coface expects growth at 3.1% thanks to a fast vaccination campaign, a sharp recovery of the global economy and the rebound in energy prices.
The extent of this recovery will however vary across sectors. We expect performance in tourism, construction and retail to be in step with new variants of the virus. COVID will also be determinant for the retail sector, one of the most diversified & developed in the region.
Oil & transport will benefit from the sharp global and regional economic recovery. In July, the UAE agreed with the OPEC+ group to increase their baseline oil production reference. Despite challenges, the outlook remains positive for the UAE oil sector, in line with some investment projects. The position of the UAE as the regional trade hub will support their transport sector.
Under these circumstances, the normalization of relations between the UAE and Israel will be profitable in terms of trade and investments across a variety of sectors. Some unexpected tensions may arise with Saudi Arabia over competition for the regional hub status, but should remain limited to the economic sphere.
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