Robust rise in capital spending, consumption to spur mild #UAE rebound | ZAWYA MENA Edition

Robust rise in capital spending, consumption to spur mild UAE rebound | ZAWYA MENA Edition

Economic conditions in the UAE appear to be muted during the first quarter of 2021, but gross domestic product (GDP) is set to rebound mildly this year from 2020’s slump driven by the non-oil sector, analysts at FocusEconomics said on Wednesday.

The recovery is expected to be on the back of robust growth in capital spending, coupled with continued government consumption. “The external sector should benefit from the gradual easing of global restrictions as vaccines are rolled out. However, tensions in the region cloud the outlook,” it pointed out.

In their Consensus Forecast Middle East & North Africa report, FocusEconomics panelists forecast GDP to expand 2.7 per cent in 2021, which is unchanged from last month’s projection, and 3.8 per cent in 2022.

“Following the easing of some restrictions at the outset of the year, domestic Covid-19 cases surged through January and February — likely due to new variants of the virus. As such, authorities tightened travel restrictions again in late January, requiring a negative test and self-isolation periods upon arrival. The non-oil private sector PMI reflected the impact of the new measures by dropping to a three-month low in February, signalling that the improvement in business conditions was only marginal,” they said.