Even though the UAE has unveiled a series of stimulus measures to help businesses stay afloat during Covid-19, the economic downturn caused by the pandemic has taken a toll on consumer behaviour. Many businesses have been severely affected by Covid-19, in a way that may take them a long period to recover or get back to normal. But with the easing of restrictions and gradual return to economic and social normalcy, what might the post Covid world and 2021 look like for UAE businesses?

There is a global consensus that based on the key economic indicators, the recovery may take longer than expected. To add more weight to the argument, IMF, that initially forecasted a contraction of 2.7% for the GCC raised it to 7.6% in 2020.[1] Consequently, businesses in order to sustain will need to adapt to new consumer preferences. Doing so will encourage a rebound in spending by the consumers. Overall the consumers are following an extremely vigilant approach towards spending. The reason for such cautiousness can be the uncertainty around economic health and job security.   

Major Growth Drivers

The economy of UAE is highly dependent on the sectors that are most vulnerable to the Covid-19 impact. The corona virus has greatly affected global trade flows and tourism. Over half of the Emirate’s GDP is generated from the sectors like tourism, hospitality, and international trade. These sectors are not only sensitive to the current impact of the Covid virus but also are more likely to be slow to recover.

The reason why these sectors are drastically affected is because of the global demand destruction of energy products. A lot of disruptions have been caused due to strict restriction on movement and commercial activities as a measure to contain the spread of coronavirus. Also, the outbreak has paralysed the airlines and hospitality industry. Once the restrictions on travel and international trade are removed, things may steadily turn back to normal. Or as Mr. Alabbar, Emaar Properties Chairman, put it in an interview with CNN that gradual and careful recovery is expected, rather than V shaped rebound. He also mentioned that the retail sector of UAE would experience a gradual recovery by the mid-2021.[2] It all depends upon the revitalization of tourism that got disrupted due to the coronavirus crisis. 

RSM Insights 

Businesses expecting to return to normal in 2021 must acknowledge the reality of the pandemic. The reality being that the economic downturn from the Covid-19 pandemic will dramatically alter consumer behaviour and expectations. While no one could have predicted the Covid crisis before it happened, businesses can sure anticipate the post-crisis problems that may arise. Business leaders need to act with agility and make reliable future-facing strategies. The bounce-back may not be quick but if companies need to withstand this economic fall out, they need to start planning for the future now. 

Feel free to consult RSM UAE to discuss your financial and budgeting concerns.  RSM is one of the world's leading audit, tax and advisory service network, recognized for innovative solutions across the globe. RSM professionals can help your company undertake granular analysis required for business planning for 2021.




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