Zawya - UAE Economy: From recovery to an upswing

The year 2021 marked the 50th anniversary of the United Arab Emirates and a watershed moment in the country's history, laying the groundwork for the UAE's transformation into an international business and investment hub. A slew of initiatives has been launched to make the UAE more appealing to foreign investors and companies, including 100 percent foreign ownership to boost the UAE's competitive edge in the MENA region, attracting the best and brightest minds via the 10-year golden visa, and launching the much-anticipated Expo 2020 in record time. The UAE has long presented itself as an economy full of possibilities, never shying away from setting new records. 2021 was a year of recovery, and 2022 could be a year of resilience for the UAE economy.

The "Expo effect"

A world expo is an international exhibition that brings people from all over the world together on a single platform. With the tenacity and endurance displayed by the economy to withstand the blow of the epidemic, the spotlight is on UAE, which hosts Expo 2020. On the event's success, revenue might reach $17.7 billion, resulting from global talents and exhibitions. As a result, the Gulf will no longer be regarded as an inaccessible land by foreigners. This can lead to more homogeneity amongst the Gulf and the West as the region becomes more familiar with the Western world.

Trade and business in the limelight

The UAE is recognized as a global role model for dealing with the pandemic in 2020 and 2021, with business sentiment at an all-time high and industries applauding the UAE's visionary policies and tactics to combat the pandemic impact while keeping the economy open enough to grow business. The UAE's strategic location between Asia and Europe, with half of the world's population only an eight-hour flight away, has enabled it to become a true economic hub – a pivot for trade, exchange, innovation, and wealth creation. The expectation of easing supply chain bottlenecks in the second half of 2022 and lower cross-border activity delays in the coming quarters would invigorate international trade growth for UAE.

In-demand tourist destination

The travel and leisure industry that is the heart of UAE's economy has been severely affected due to the pandemic. However, with UAE ramping up its vaccination campaign and strict rules in place, tourists have bestowed confidence in the region as one of the safest countries to travel to amidst the pandemic. Thanks to the ongoing Expo, UAE's glam attracts many individuals and businesses. Furthermore, Expo 2020 has generated enthusiasm in the UAE, and with many nations around the world still closed to tourists, the UAE is reaping benefits from the global event. UAE continues to be a top tourist destination even during tough times, boosting tourism, helping to revitalize the economy.

Real estate boom

While the world economy observed the UAE's swift recovery during the worst of times, the UAE's real estate market may be able to entice investors as global migration picks up speed and various investor- and resident-friendly policies are being implemented. The UAE's unique benefits – the quality of life, safety, security, world-class infrastructure, international connectivity, and the country's leadership in the fight against the pandemic – have influenced an increasing number of wealthy people to consider investing in and relocating the UAE. In addition, the recent liberalization of the company licensing framework and immigration reforms have demonstrated the UAE's strong desire to attract investors. Even though Expo 2020 will drop the curtains in March, the transformation of the expo site into an integrated mixed-use community known as 'District 2020' will play a substantial role in driving the real estate market.

The rise of the "black gold"

Oil demand suffered a severe blow in 2020 when the initially ignored coronavirus in China spread worldwide and prompted lockdowns. However, the wave eventually subsided as global vaccination rates improved and governments got immune to the virus, and oil demand began to rebound considerably faster than most thought. Crude oil prices are predicted to rise further in 2022, as demand is expected to stay strong due to governments' ability to regulate emerging variations, rising vaccination rates, economic recovery, and increased mobility due to the easing of lockdown restrictions. In addition, the global economy will normalize at a rapid pace, resulting in a significant recovery in demand. About 30 percent of the UAE's GDP is based on oil and gas output, and upward momentum in crude oil is expected to be a boon to the UAE economy.

Growing blockchain adoption

Even though the UAE has long been associated with the term "oil country," it is again forging ahead, shedding its image as an energy-focused country in favor of a technologically savvy one. The UAE has always been at the forefront of embracing and deploying groundbreaking technology due to its open-minded culture and readiness to diversify. Blockchain is a hot topic in the business world, and several major firms are investing heavily in the technology. UAE intends to leverage this technology to supply chains, financial services, healthcare records, government services, and countless other business processes as a part of its initiatives to transform 50 percent of all government transactions onto blockchain ledgers soon. The UAE's determination to stay at the forefront of global digital change appears to be stronger than ever.

With government support, easy access to capital, and a public prepared to adapt to change, the construction of diverse blockchain ecosystems in the coming years, UAE can emerge as a new global technological hub.

The year 2021 has been a year of healing, whereas 2022 would be the year of advancement. Increased tourist traffic, lavish retail spending, and soaring real estate investment have benefited the broader UAE economy because of Expo 2020 and high consumer confidence. The masterstroke is UAE's determination to invest in blockchain technology to establish itself as a leader for cutting-edge innovation. Despite the pandemic's numerous ups and downs, UAE is perfectly prepared to take advantage of the available opportunities to end 2022 on a high note.