The UAE economy is set for a faster growth in the final quarter of 2021 after a relatively slow start to the year.
The relaxation of travel restrictions in key tourism markets, including the UK and Saudi Arabia, is supporting a recovery in the travel and hospitality sectors in the UAE – and Expo 2020 Dubai has already contributed to an improvement in business conditions in October.
The UAE Purchasing Managers' Index, a composite indicator designed to give an overview of operating conditions in the non-oil private sector, rose to the highest level in more than two years in October as businesses reported strong growth in activity and new work, which many attributed to the start of Expo 2020. Businesses were also more optimistic about their future output than they have been since the start of the pandemic last year.
However, the improvement in demand last month has not yet fed through to faster job growth in the UAE’s private sector. The employment component of the PMI survey showed only a slight increase in October, similar to the September reading. To some extent, the reluctance to boost hiring is a natural response to the increased costs faced by many businesses due to supply chain disruptions and higher raw material prices.
This is leading to a build-up in the backlogs of work and we expect firms will need to increase hiring in the coming months if demand continues to remain robust.
Expo 2020 is also likely to provide a boost to consumption spending over the next two quarters. A consumer confidence survey by Dubai’s Department of Economic Development showed that consumers were more optimistic about their job prospects, their finances and the state of the economy in the third quarter of 2021 than they have been in several years.
Bank lending to individuals has also increased this year following deleveraging in 2019 and 2020, providing further evidence of a recovery in consumer spending in the UAE. Emirates NBD expects the non-oil economy to post growth of 3.5 per cent in 2021, accelerating to 4 per cent in 2022.
Developments in the oil market are also likely to boost headline gross domestic product growth in the fourth quarter of 2021 and through to 2022.
The UAE’s oil production has increased by 100,000 barrels per day since the end of June and is on track to reach 2.9 million bpd by the end of the year.
Oil production is likely to continue to rise in 2022 as Opec+, the oil exporters' bloc, gradually unwinds its Covid-related production cuts. As a result of this increase in oil production as well as further investment into the UAE’s oil and gas sector, headline GDP growth is likely to accelerate to 4.6 per cent in 2022 from an estimated 1.9 per cent this year.
As in the rest of the world, inflation in the UAE is accelerating, although it remains relatively low.
The Consumer Price Index (CPI) grew 0.5 per cent year-on-year in August – the first positive annual inflation rate since December 2018. Food and transport have been the main sources of inflation in the UAE in recent months, with the latter driven by higher crude oil prices.
However, food prices in the UAE are still lower than they were a year ago. Housing and utility costs – the biggest component of the CPI – remain deflationary, but the rate of price decline has slowed.
It can take 12 to 18 months for changes in rents to feed through to the CPI due to the nature of the index. Nevertheless, inflation in the UAE is likely to continue to tick up, averaging zero per cent in 2021 and accelerating to 1.5 per cent in 2022.
While the near-term outlook for the UAE is certainly brighter, uncertainty remains high and there are several risks on the global horizon. The coronavirus pandemic remains the largest source of uncertainty, with new cases still high in Europe, the UK and the US, the global vaccine roll-out remaining highly uneven and the ever-present risk of new potentially vaccine-resistant variants.
Global growth is slowing on the back of labour shortages and supply chain disruptions, while central banks are starting to withdraw the exceptional monetary support they have provided over the past 20 months.
The US Federal Reserve started tapering its asset purchases this month and markets are pricing in two rate hikes by the Fed before the end of 2022. If the markets are correct, tighter monetary policy could put a further brake on growth next year.
Khatija Haque is chief economist and head of research at Emirates NBD
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Three and a half stars
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
UAE currency: the story behind the money in your pockets
Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
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The%20specs
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
The specs: 2019 Mercedes-Benz C200 Coupe
Price, base: Dh201,153
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Nine-speed automatic
Power: 204hp @ 5,800rpm
Torque: 300Nm @ 1,600rpm
Fuel economy, combined: 6.7L / 100km
Under 19 World Cup
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
Indika
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Leaderboard
63 - Mike Lorenzo-Vera (FRA)
64 - Rory McIlroy (NIR)
66 - Jon Rahm (ESP)
67 - Tom Lewis (ENG), Tommy Fleetwood (ENG)
68 - Rafael Cabrera-Bello (ESP), Marcus Kinhult (SWE)
69 - Justin Rose (ENG), Thomas Detry (BEL), Francesco Molinari (ITA), Danny Willett (ENG), Li Haotong (CHN), Matthias Schwab (AUT)
How the bonus system works
The two riders are among several riders in the UAE to receive the top payment of £10,000 under the Thank You Fund of £16 million (Dh80m), which was announced in conjunction with Deliveroo's £8 billion (Dh40bn) stock market listing earlier this year.
The £10,000 (Dh50,000) payment is made to those riders who have completed the highest number of orders in each market.
There are also riders who will receive payments of £1,000 (Dh5,000) and £500 (Dh2,500).
All riders who have worked with Deliveroo for at least one year and completed 2,000 orders will receive £200 (Dh1,000), the company said when it announced the scheme.
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Produced by: Poetic License Motion Pictures; RSVP Movies
Director: Ritesh Batra
Cast: Nawazuddin Siddiqui, Sanya Malhotra, Farrukh Jaffar, Deepak Chauhan, Vijay Raaz
