A road map... and a model to confront inflation, high interest and the global food crisis
The UAE's economy... the ability to adapt to global crises
The local market did not witness any shortage of food commodities, medicines and other goods.
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Abdullah bin Touq Al Marri: "The UAE has demonstrated a high ability to achieve a balanced administration between the health and economic files."
Ibrahim Al-Bahr: "The country's good reputation, and its relations with all countries of the world, helped it diversify its import destinations and sign exceptional agreements."
Awatef Al-Harmoudi: "Bank financing rates have returned to pre-coronavirus levels, and perhaps even higher than them."
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Since the beginning of the Corona virus pandemic and until now, through the Russian war on Ukraine, the world economy has witnessed a series of negative repercussions that affected the flow of exchange of goods and services between countries, and slowed down the supply chains of food and merchandise, which created inflation in prices, forcing central banks around the world, especially The US Federal Reserve decided to raise the main interest rate more than once, amid fears and warnings of stagflation that would exacerbate the suffering of global markets.
roadmap
Although the UAE economy is strongly open to the performance of the global economy, and its market depends on the mechanism of supply and demand, the plans that have been developed by the official authorities have contributed to the rapid adaptation to the variables of the global economy, and the crises it is witnessing.
Since the beginning of the Corona pandemic, and its repercussions, as well as the Russian war in Ukraine, the UAE government has dealt according to a road map that is a model for many economies, as it provided direct and indirect support for all economic activities, as well as taking a number of immediate decisions, Such as reducing and canceling fees imposed on the business sector, providing promotional and marketing offers to absorb the effects of raising interest rates, stimulating demand for financing, and then moving the retail sector, in addition to diversifying import destinations to provide all foodstuffs, and not limiting them to areas experiencing conflicts or wars, and not allowing Increasing the prices of basic commodities only after the approval of the Ministry of Economy.
UAE economy
According to officials and specialists, what the UAE economy is witnessing in terms of strong growth rates, an increase in employment and wages, and the absence of any shortage in food commodities, medicines and all other goods, as well as the high demand for funds of all kinds, is a direct reflection and success of the plans and policies in place since The beginning of the “Corona” crisis, and it continues until now, with the continuous review of it, and its amendment whenever the global market situation requires it.
solid economy
The Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, said that the UAE has provided a model for the world in dealing with what is witnessing the global economic arena with all its variables.
He stressed that the UAE's national economy is solid and resilient, and has elements that enhance its ability to overcome crises and achieve leadership.
He continued, "In the face of the (Covid-19) virus, for example, support and huge economic stimulus plans were provided to the sectors most affected with a total value of 282.5 billion dirhams, which formed the protection of entrepreneurship and small and medium-sized companies, and linking financing to the beneficiary sectors according to well-studied plans and effective mechanisms."
And he indicated that the second phase, which is continuing so far, was represented by a long-term stimulus plan for the economy to accelerate recovery, advance growth, and work to transform challenges into opportunities to achieve sustainable economic growth by enhancing the flexibility and sustainability of the economic model followed, and encouraging financing and investment in sectors with future potential. high.
Al-Khoury pointed to the most prominent sectors with future potential represented in the digital economy, including: artificial intelligence, the fifth generation network, the Internet of things, smart cities, and green economy concepts and industries such as: renewable energy, electric cars, and the circular economy, in addition to enhancing productivity, through Integrating 3D printing technologies and robotics systems, as well as enhancing food security, using advanced technologies such as artificial intelligence, biotechnology, and genetic engineering, in addition to the technology sector, which plays an important role in developing a huge database to identify types of value-added and incubatable industries locally, which contributes to promoting the economic diversification of the UAE.
Policy proposal
The Undersecretary of the Ministry of Finance said that the Ministry is working on proposing policies, legislation and incentives required to support the success of opportunities for the industrial sector in the country, ensuring self-sufficiency, continuous preparation for any future challenges, and launching programs to support the health, education, technology and food security sectors, so that the human element is the basis of development. comprehensive.
He stressed that the ministry will continue to work and coordinate with the international community, in order to ensure building an economic and geopolitical cooperation system to optimally address health and environmental disasters, contain them and reduce their results, in addition to supporting and encouraging government innovation programs, to find innovative mechanisms to develop and develop the economic sectors in the country, and achieve comprehensive development for all sectors, and the launch of a fee pricing guide for federal government services, with the aim of providing a transparent, consistent and easy-to-apply framework that all concerned federal authorities can use in the fee pricing process.
general budget
The Cabinet had approved a federal general budget of 58.9 billion dirhams for the year 2022, which focuses on providing the highest possible level of welfare for citizens and residents of the country. health care, and social affairs in the state to the highest levels.
Business Support
Since the beginning of the “Corona” pandemic until now, the Ministry of Finance has taken the initiative to cancel and reduce fees, based on the fee review project, as the value of many fees was reduced to reduce the financial burden on dealers, especially fees for services of the ministries of “economy” and “human resources and Emiratisation”. Many fees were canceled in the Ministries of Interior and Finance, at a time when the total value of reductions and cancellations amounted to more than one billion dirhams.
In the same context, local departments granted businesses a reduction in fees for some transactions, and the cancellation of others, which greatly contributed to the speed of adjustment and the realization of surpluses.
advance plans
According to the economist, Dr. Hammad Abdullah bin Hammad, the most important characteristic of the UAE economy is the presence of pre-established plans and strategies that include paths to deal with crises and emergency events, locally or globally.
He said, "Therefore, citizens and business owners did not feel that there are significant effects due to the fluctuations in the global economic arena."
He stressed that the availability of stable and secure legislation, flexibility of decisions, as well as the reduction of many fees, greatly helped business owners in achieving financial savings that were directed to expansion and growth.
positive outlook
He continued: "According to the survey of business conditions issued by the Central Bank recently, the expectations of business during the first quarter of this year were optimistic regarding all variables, amid the high market demand for goods and services, and the approach of commercial operations to pre-Covid levels. 19), increasing projects and the number of dealers.
The survey also pointed to the recovery of domestic consumption during the first quarter of this year, supported by the increase in employment and wages, indicating that based on the data of the wage protection system, the number of employees and wages increased by 8.1% and 4.9% on an annual basis, respectively at the end of March 2022, It reached its highest level since the start of the data series in 2012.
According to the Central Bank, the wholesale and retail trade sector is still showing strong signs of recovery, exceeding the levels of 2019, as it recorded a growth of 4.5% in total consumer spending in 2021, while its future outlook for 2022 is positive.
According to a pricing mechanism that included 11,000 commodities covering most products
“Economy”: “prior approval” is a condition for raising prices
The Ministry of Economy has approved a new policy to deal with the pricing mechanism of basic consumer goods, so that goods are divided into two groups. The first is subject to the condition of prior approval in the event that the supplier wishes to raise their price as a result of high import costs, by applying for a price increase through the electronic system dedicated to this service on the website. The Ministry of Economy must submit all the evidence and data regarding the increase in costs and their direct causes, so that the Ministry can study the request comprehensively and conduct a fully justified review, and then decide on the request, while determining the percentage of the proposed increase if it is approved.
This group includes more than 11,000 commodities covering most products, most notably: fresh and dry milk, fresh chicken and eggs, bread and flour, sugar, salt, rice, legumes, cooking oil, mineral water, and others.
balanced management
According to the Minister of Economy, Abdullah bin Touq Al Marri, the UAE, by dealing with the repercussions of the Corona pandemic, has set a global model, and the state has demonstrated a high ability to achieve a balanced management between the health and economic files.
Economic indicators confirm the recovery of the national economy, and the restoration of its positive growth rates, at rates that exceeded the expectations of international organizations.
Al-Marri indicated that the GDP growth estimates for 2022 exceed 5%, stressing that all efforts and development plans target the citizen first.. He pointed out that the UAE achieved economic growth during 2021 that exceeded expectations.
Al-Marri explained that the rise in commodity prices is a global challenge, indicating that the Ministry of Economy has well-studied policies and plans to contain any unjustified increases in the state's markets, taking into account the balance between the consumer's interest in obtaining goods at reasonable prices, ensuring the sustainability of supplies, and the availability of goods.
Emergencies and crises
In a related context, the expert in retail affairs, Ibrahim Al-Bahr, said that the success of the UAE in managing the food and drug file since the beginning of the “Corona” pandemic is due to several factors, the most important of which is the support of His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the State, when he reassured everyone Food and medicine are our responsibility, and “do not cripple them”, which created a high spirit among everyone, and an unparalleled societal solidarity, stressing that this spirit continues so far in the face of the decline in supply baskets and the rise in food globally.
He stressed that the UAE has proactive plans and early preparation, noting that "the establishment of the Emergency and Crisis Department took place nearly six years ago, at a time when the Corona virus pandemic was its first test, and it succeeded with distinction."
He stressed that the country's good reputation, and its relations with all countries of the world, helped it diversify its import destinations, and sign exceptional agreements with exporting countries, despite the conditions of the war in Ukraine to ensure the provision of goods and merchandise.
Al-Bahr continued: “Price increases in the UAE are among the lowest rates in the world, reaching 300% in some countries,” referring to the government’s decisions to stop any price increases without its approval, the merchants’ response by reducing profit margins, and the strong competition in an open market, which is All factors contributed to the availability of goods and the absence of any shortage in them.
Al-Bahr pointed out that the high awareness among the residents of the UAE also contributed a lot to the stability of the market and the lack of acceleration on storage, as happened in other societies, which contributed to the success of the state’s plans and strategies in managing the food file, despite the sharp fluctuations in the global market.
Strong performance of the total real GDP of the UAE
Non-oil GDP is expected to rise by 4.3% in 2022. Archive
The latest report issued by the Central Bank of the Emirates stated that the first quarter of 2022 witnessed a strong performance of the total real GDP of the UAE, as it is estimated that it increased by 8.2% on an annual basis.
The Central Bank attributed the strong performance to the increase in oil production, as well as the noticeable improvement in real non-oil GDP, expecting real GDP to grow by 5.4% and 4.2% in 2022 and 2023, respectively.
He stated that estimates indicate that the country's hydrocarbon GDP increased on an annual basis by 13% during the first quarter of this year, in line with the "OPEC +" agreements.
The Central Bank expected oil GDP to grow by 8% and 5% in 2022 and 2023, respectively, and non-oil GDP to increase by 4.3% and 3.9% in 2022 and 2023, respectively.
He stated that estimates indicate that the non-hydrocarbon sector increased by 6.1% on an annual basis during the first quarter of this year, benefiting from the removal of many restrictions related to "Covid-19", and the recovery of global travel activity, as the country continued to play a leading role globally. to contain the spread of the virus.
The banks' half profits reflect the strength of their financial solvency and their enjoyment of strong revenues.
Facility for individual loans and easing of conditions for companies
The great demand for financing reflected positively on the banks' profits for the first half. archival
To face the fears of a global recession, as a result of repeated US interest rate hikes, with the aim of controlling inflation in the United States, which recorded its highest level in 40 years, reaching 8.6%, banks in the UAE have been active in stimulating and motivating the retail sector, by providing facilities for loans individuals, and loosening the terms of corporate lending.
bank financing
Banking expert, Awatef Al-Harmoudi, says that bank financing rates have returned to levels before the Corona virus pandemic, and perhaps even higher than them, despite the increase in key interest rates by the central bank, coinciding with a similar raise by the US Federal Reserve, due to the policy of linking the dirham. in dollars.
Al-Harmoudi added that banks offer strong offers to stimulate various financings, including a reduction or exemption from transaction fees, in addition to insurance fees, to strike a balance with the high financing price.
She stressed that the great demand for financing by individuals and companies was positively reflected on the banks' declared profits for the first half of this year, as they exceeded pre-pandemic levels, although it can be said that dealers are borrowing for necessities, and there is no longer a culture of loans for luxuries, thanks to the spread of awareness. finances among the community.
Bank profits
According to the financial results, the net profits of 11 national banks listed in the local capital markets rose to 20.91 billion dirhams in the first half of this year, reflecting their strong financial solvency, strong revenues and high liquidity.
And based on the disclosures of the listed banks announced on the financial market websites so far, the net profits of the banks during the period from January to June 2022 increased by 43.5%, or the equivalent of 6.34 billion dirhams, compared to about 14.57 billion dirhams in the same period last year 2021.
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