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Dubai’s biggest lender Emirates NBD expects the UAE’s GDP to grow at 1.5 percent this year, with the non-oil sector growing at 3.5 percent, slightly lower than the UAE central bank’s forecast of 4 percent.
In a new report, the bank said the UAE’s early and relatively fast vaccine rollout has allowed the economy to remain largely open.
Hotel occupancy rates have recovered from last year’s pandemic lows, private school enrollments in Dubai have increased 3.9 percent since September 2020 and the number of active mobile phone subscriptions has also increased since the lows last summer.
However, these indicators remain below pre-pandemic levels, the report said.
Rents and residential real estate prices have also recovered since the start of the year, particularly for larger units.
“All of this points to a recovery in private consumption expenditure in the UAE, which fell by -12.5 percent last year,” said Khatija Haque, Head of Research & Chief Economist.
The bank also expects a 7 percent increase in total government expenditure, to 397.9 billion dirhams ($108 billion).
According to the report, revenues are set to grow by around 12 percent on the back of higher oil prices as well as recovery in taxes and fee income and higher enterprise profits.
“Overall, we expect the budget to post a small surplus of 1 percent of GDP this year,” Haque said.
The country has also benefitted from the sharp rebound in global merchandise trade in recent months, the report said. The volume of merchandise trade has exceeded pre-pandemic levels as consumers in developed markets have bought more goods, being unable to spend on travel, entertainment, and other services due to pandemic restrictions.
“We expect the transport and logistics sector in the UAE will be one of the key drivers of the economic recovery this year,” the report added.
(Writing by Brinda Darasha; editing by Seban Scaria)
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