Economic recovery within the UAE and the Gulf region is rallying following a rise in the OPEC+ quota, an improvement in the non-oil private sector’s performance as well as the relaxing of coronavirus restrictions, according to analysts.
“The UAE’s economic recovery appears to have gathered momentum in recent months. Oil production has started to increase as OPEC+ quotas have been lifted. Meanwhile, the whole economy Purchasing Managers’ Index (PMI) – which covers the non-oil private sector – hit a two-year high of 54.0 in July,” said William Jackson, chief emerging markets economist at Capital Economics.
“Daily new Covid-19 cases have continued to trend down and, on a seven-day rolling basis, are now at their lowest level since October. Against this backdrop, officials have eased restrictions further including by increasing capacity limits at restaurants, cinemas and malls in Dubai,” he went on to say.
According to data for July’s PMI, non-oil output growth hit a two-year peak, whilst output and new business increased at the fastest pace since July 2019.
IHS Markit economist, David Owen said the UAE’s non-oil sector reported a busy start to Q3 as businesses saw the steepest rise in new orders for two years thanks to surging domestic sales and robust market confidence.
As the number of coronavirus cases falls under 1,000 a day in the UAE, authorities announced the recommencement of tourist visas from Monday and also relaxed restrictions thanks to the successful vaccine rollout.
“The UAE remains ahead of the pack in the vaccine race and has started to deliver booster jabs in recent weeks. Vaccine rollouts elsewhere in the Gulf have gathered pace and most countries have now inoculated upwards of 60 out of every 100 people with at least one dose. Easing restrictions, coming alongside rising oil production and higher oil prices providing scope for fiscal policy to be loosened, means that economic recoveries in the Gulf are likely to gather pace over the rest of this year and into 2022,” Jackson added.
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