Economic forecast for 2021
Written by: Dr. Ahmad Bin Hassan Al Shaikh
After nearly two weeks we will enter a new year and I ask God to bless us with good health.
Before talking about the coming year, we have to talk about this year. The last quarter of this year disrupted expectations at the local level and the results were better than expected. Observers of the local economy in particular and the regional economy in general noticed a slight easing over the past two months.
Most of the international and local reports that I have read indicate that the local economy was in a state of contraction, and the percentages varied between -4.5% and -6%. It is noticeable that this contraction was more than these percentages for some sectors, especially those related to the tourism sector and the retail sector, while the industrial sector was reaping positive growth, the first reason is that traders switched to buying from the local market due to the closure of the borders of exporting countries such as China and India, and the second due to the arrival of the local product ( In the absence of an imported alternative) to the consumer who favored local products due to their low price and competitive quality.
The technology sector also witnessed positive growth due to the increased demand for it during the closing months, and it is expected that in the future, we will see an increase in the use of this technology.
The outlook and expectations for the next year are not blurry, but they need to be certain, including the validity of vaccination and the absence of side effects, the absence of new mutations of the virus, the absence of other viruses, the absence of unexpected economic shocks, and global political stability.
Assuming the certainty these expectations, the spread of vaccination will lead to a state of psychological comfort in various countries of the world, which means that life will gradually return to normal.
At the local level, I expect that a large part of the economy will return to its near-normal cycle, and I believe the industrial and technology sector will have greater economic growth than last year.
As for the tourism sector, with the procedures followed by Dubai in particular, the signs of the tourism movement have been positive during the past two months and continue to improve, God willing.
Today the global index is between 15% and 25% depending on the countries, Dubai in particular, the occupancy rate (according to my conversation with some five-star hotel managers) reached between 60% and 65%, and this is a positive indicator for the local tourism and economic movement Which heralds a local economic breakthrough at the level of the Emirates.
It should be noted that the hotel occupancy rate decreases depending on the rating of the hotel, for example, a five-star will recover faster than four-star, and so on.
The coming weeks will also be a major support for tourism, as most of the winter resorts are still in lockdown, and the UAE, especially Dubai, welcomes those coming to celebrate during Christian holidays, and enjoy the activities that most winter banks have also stopped due to the general closure.
I also believe that the next year will witness the inclusion of new joint stock companies. It is expected that these companies will exist and transform from private joint stock companies to public companies, which will transfer part of the cash liquidity to these issues.
Real estate trends bear all possibilities, as the amount of demand in general will decrease with the departure of a number of tenants, whether by leaving the country or by taking out their families, and sharing housing with their friends, and consequently the decrease in family demand with the increase in supply due to the completion of many development and construction projects, and at the same time some residents in areas Far from their work to other cities such as Dubai and Abu Dhabi, which helps to stabilize demand, but in all cases it is expected that rental values will tend to decline.
Debt collection will be one of the most important obstacles to the positive movement in the coming year. Also, arranging companies from the inside and cutting out some employees will be the route that the private sector is heading to during the coming period, to avoid reaching the stage of continuing financial losses.
Globally, the situation is different, the impact of the pandemic continues, but to a lesser extent, and the global economy will face challenges that affect growth, and if the statistics are proven then I think we will see the beginning of a global détente in the second half of next year.
This is a reading of today's statistics and information and it may change at any moment. I say that if I am wrong, it is from God, and if I sin, it is from myself and Satan, as I say, only God knows the unseen, but these are personal endeavors.
I hope that I have succeeded in explaining this topic and communicating the information smoothly to everyone who reads it.
Dr. Ahmad holds a PhD in Economy from Coventry University (UK), MSc in Economics from Dundee University (UK), and a BSc in Political Science from the UAE University, and as a natural leader, he has become a sought-after speaker, an influential person on social, and an expert on the business-related matters in local newspapers and social media.
Dr. Ahmad Bin Hassan Al Shaikh,