The economy of the United Arab Emirates will suffer a deeper contraction this year than first estimated, dragged down by disruptions caused by the coronavirus pandemic, according to the country’s central bank.
Gross domestic product will shrink 5.2% in 2020, compared with a previous forecast for a decline of 3.6%, the central bank said in its quarterly review on Wednesday. GDP in the Arab world’s second-largest economy dropped an estimated 7.8% last quarter after a 0.8% contraction in the prior three months, it said.
“As a regional trade, tourism and transportation hub, the UAE economy was hit by the general ban on travel, while manufacturing production shrunk due to supply chain disruptions, limited export opportunities and subdued domestic demand,” the central bank said.
The outlook is slightly worse than forecasts compiled by Blomberg, which see a decline of 5.1% this year. The UAE economy last contracted by over 5% in 2009, according to the International Monetary Fund.
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