UAE GDP to bounce back in 3 years
UAE GDP to bounce back to pre-pandemic level in 3 years
The rapid rollout of the Covid-19 vaccine in the UAE could support a more rapid recovery in domestic tourism and provide a vital boost to the hospitality and retail sectors, Moody’s Investor Service said as it forecast a stable outlook for the economy.
The global rating agency gave the Arab world’s second-largest economy Aa2 stable outlook and predicted the country’s nominal GDP would bounce back to pre-pandemic levels over the next three years.
“The credit strengths of the UAE include the high level of GDP per capita, a history of domestic political stability coupled with strong international relations, and the assumed full backing from the government of Abu Dhabi and its strong balance sheet,” said Moody’s analysts Thaddeus Best and Rafay Ahmad.
At $63,590 in purchasing power parity terms, the UAE’s 2019 GDP per capita ranks as one of the highest in the world, said the rating agency.
The country’s economy, most diversified among its GCC peers, is also relatively large in nominal GDP terms – at $354 billion in 2020 – and ranks in the top quartile of the sovereigns we rate, pointing to above-average resilience to shocks, Moody’s said.
“Hydrocarbons have served as the backbone of the UAE economy, directly contributing between 30 per cent and 40 per cent of nominal GDP historically. However, the collapse in oil prices since 2015 has seen this share fall significantly to between 20 per cent and 25 per cent,” the report said.
Moody’s assessed the UAE’s economic strength as “aa3” reflecting its very high-income level, moderately large size, abundant hydrocarbon reserves with low cost of extraction, vibrant non-oil economy and well-developed infrastructure.