The Emirati Central Bank expected a deeper economic contraction for the UAE this year than it was initially expected, due to the disruptions caused by the Coronavirus pandemic, revealing a contraction of 5.2% in GDP in 2020, compared to a previous forecast of a 3.6% decline.
The GDP fell by 7.8 percent during the last quarter, after contracting by 0.8 percent during the previous three months. The central bank indicated that the UAE economy was affected by the general travel ban, while industrial production decreased due to supply chain disruptions, limited export opportunities, and a decline in domestic demand.
The forecast is slightly worse than the forecast compiled by Bloomberg, which predicted a decline of 5.1 percent this year. According to the International Monetary Fund, the last UAE economic shrinkage was by more than 5 percent in 2009.
Non-oil GDP contracted by 9.3 percent during the second quarter, compared to a decline of 2.7 percent during the previous quarter. Annually, the non-oil economy is expected to contract by 4.5 percent due to the outbreak of the Coronavirus. There are also expectations of an increase in the government spending, which will approach 28 percent in 2020, on the other hand, the UAE Central Bank expects a recovery in employment.
Source (Al-Arabiya.net, Edited)
