Covid Impact on UAE Economy Essay Sample

Covid-19 impact on UAE Economy Essay

In this essay, we will discuss the Covid-19 impacts on the UAE economy. Post covid Diversification, how uae economy is affected in covid-19

The UAE economy is much dependent on Oil and Gas, International Trade, migration, and traveling. All these sectors have shut down during the Covid-19 pandemic. Hence, the GDP rate of UAE is as -6.57% in the financial year 2020. The mechanism by which estimates the Covid-19 pandemic impact on the global economy infers up to a 40% decrease in direct foreign investment in 2020-21, a 32% drop in international trade, and about 63% dip in worldwide passenger traffic. 


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The emerging consent is that the novel coronavirus will cause a critical collision upon the global and the UAE economy. The International Monetary Fund’s World Economic Outlook estimated a more mysterious recession in global economic pursuits greater than the global financial crisis of 2008-2009.

Covid-19 and its impact on UAE Economy

The UAE government will need to make great efforts to recover from the consequences of the impact of the Covid-19 pandemic on the economy.

The effect of the Covid pandemic will be more robust, including the global economy and the modern UAE economic design reveals immense risks from clashes in oil prices, the drop in global manufacturing volume, and foreign migration.

The following are the scenarios to explore the possibility of changes to the economic structure of the UAE.

Shrink the Storm

The COVID-19 pandemic had a negative impression on the global economy, on oil and gas prices, international business and migration, and Foreign direct investment. The impact had hit the UAE economy that relies on firm oil prices and demands migrant workers to maintain its business exercises.

Dubai’s debt crisis is in the worst position to tackle any future financial dilemma induced by the COVID-19 pandemic. Since Dubai’s sovereign debt is a burden on its own. That is equal to 110% of total GDP in 2019, putting it amongst the maximum debt-to-GDP rates globally. 

Furthermore, Abu Dhabi has financial obligations from falling oil costs. Its SWF(sovereign wealth fund) measured at $800 billion, implies that Abu Dhabi is in the position to face moderate to critical financial consequences from the Covid-19 pandemic.

Diversification of UAE Economy

This situation assumes the Covid -19 pandemic might have a longer impact on the UAE or global economy and even delayed improvement over a decade. The impression on the tourism and oil industries will be more potent than projected. Hence, a diversified non-energy and energy industry may present a significant collection of stocks to hedge versus the uncertainties linked with dependence on the core oil trade. 

UAE is on the route to diversification, with meaningful investments into non-oil sectors such as education, infrastructure, renewable energy, and healthcare.


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The UAE as Supply Chain Leader and transportation challenges due to Covid

 A report of the International Air Transport Association stated that air transportation valued at $19.3 billion or about 5% of the UAE GDP in 2019. When considering tourism too, this number was more than double.

The roadblocks to foreign commerce are the closure of markets and export restrictions acquainted by nations while responded to the Covid-19 pandemic. That puts the issue, whether the popular world economic system is evolving towards an edge or reshaped. That issue occurred with moves like local supply chains developing as nations endeavor to lessen mandates on Chinese production.

The growing demand for protectionist plans might raise more potent without a vaccine for controlling this toxic novel coronavirus. 

 However, World Economic Forum reported that the UAE had grown to shift the 25th worldwide in the 2019 Global Competitiveness Report. Additionally, maintaining its status as the most aggressive economy in the Middle East and North Africa. That places the UAE in a state to attempt to put itself as a supply chain leader.

The Emiratization of workers due to Digital Economy extension

The COVID-19 pandemic allows the UAE to restructure its Emiratisation strategy. The signs for estimating the result of the UAE Vision 2021 and National Agenda are the percentage of UAE locals working in the private industry and the division of active UAE citizens in the entire workforce. Though, 3.64% of employers in the private division are UAE inhabitants. Moreover, 7.62% of the whole employees are UAE nationals, according to local agencies.

The Emiratisation of labor during the extension of the digital economy allows many perks to the UAE, forming a knowledgeable economy, career opportunities for the citizens, and a more comprehensive source of income for the administration. Research at Accenture in 2018 projected expenditures in artificial intelligence (AI) would occur in a 1.6% increment in the UAE economy and append $182 billion to its economy by 2035.


The ideas presented above depends on the variety and span of improvement in the world economies of the crushing consequences of the COVID-19 pandemic. Furthermore, the degree to which the policies of globalization are reserved. For instance, if nations withdraw from nationalistic and protectionist strategies, it has an unfavorable impact on the UAE economy, via its effect on international trade, migration, and international investment.  

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