You are here

The Response to Covid-19: The United Arab Emirates Case

The novel coronavirus disease 2019 (COVID-19) outbreak was a major shock for the global economy, with severe uncertainty about the duration and intensity, disrupting production, trade and business. The actions being taken to prevent the collapse of healthcare systems around the world, threaten to create a deep economic crisis like no other, caused by the widespread failure of businesses. Many countries are beginning to lift the initial lockdown strict measures in an attempt to return to normal and at the same time are trying to protect the poor and vulnerable, support businesses, and bolster economic recovery.

Although the global economic impact of the coronavirus pandemic has yet to be fully identified, as the disease is in progress, industries face a number of challenges related to COVID-19. Scarce resources, supply chains disruption and unprecedented unemployment due to physical distancing measures, expose organizations worldwide to unique risk challenges.

As a result of the pandemic, the global economy is projected by the IMF to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. Partial recovery is projected for 2021, with above trend growth rates, but the level of Gross Domestic Product (GDP) will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.

The UAE economy is being affected by the spread of COVID-19 as well as the sharp decline in oil price. The GDP in the United Arab Emirates was worth 425 billion US dollars in 2019, representing the 0.35 percent of the world economy. In the first 2019 quarter, Total UAE GDP was recorded at USD 103 billion; the Non-oil GDP represented 75% of the Total GDP. The Non-financial corporations (excluding oil) accounted 58.3% and Mining and quarrying (includes crude oil and natural gas) 25% of the total UAE GDP.

Source: Federal Competitiveness & Statistics Authority

Source: UAE Central Bank estimates and projections for 2019 Q2-Q4

As the global economy is expected to see a deep contraction, the economic hit on global trade, travel and logistics is likely to affect external demand for the UAE’s services-oriented economy. UAE was one of the first countries to respond proactively, were highly organized, strategic, and technologically advanced in conducted activities in a phased manner and took action with strict measures to control the spread of COVID-19 including closure of all schools, shopping malls, parks, dine-in restaurants, and various tourist attractions, imposing isolation to all its residents and ensuring compliance. In addition, many communication channels were opened, giving regular updates from the authorities. Moreover, wide-ranging travel restrictions were imposed suspended prayers at mosques and other large gatherings, and enacted teleworking arrangements in government offices. Alongside, the authorities have increased testing and scaled up disinfection efforts, established a dedicated task force to ensure uninterrupted supply of consumer goods and prevent manipulative pricing practices, and launched remote learning initiative to ensure continuity of education.

In response to the Covid-19 pandemic with domestic activity diminished due to the widespread shutdown of the service sector, the Central Bank of the UAE and governments at the federal and emirate level have announced a number of measures to ensure business continuity and support business activity.

These included reducing the cost of doing business to support the private sector by reducing and accelerating existing infrastructure projects and introducing a consolidated platform for UAE residents based in the UAE holding a residence visa and who are unemployed as a result of COVID-19, to apply for jobs on the Virtual Labor Market Portal. UAE utility companies have also reduced the price of electricity and water. The government announced nearly USD 70 billion (equivalent to approximately 16% of GDP) in various fiscal measures, including credit guarantees, reduced taxation and slashing banks’ reserve requirements.

The ways and the means to reduce and eventually eliminate the threats and risks on businesses vary. Emirates Airlines announced that it was suspending all passenger services for three months due to the Covid-19 crisis. Its planes were to be grounded and the company’s employees were to receive reduced pay. Emirates, like many other businesses, decided the best way to get through the crisis was to stop doing business.

Starting April 24, the UAE authorities have begun gradual reopening of shopping centers and other businesses, subject to social distancing requirements in an attempt to minimize potential infection rebounds and to assess in each stage the impact and disease progression.

As it seems, business as usual may not happen for a while, but the business of managing risk is far more important than ever, as the types of risk that businesses face shift. Businesses have to deal with this challenging operating environment with uncertainty over how long it might persist. Making workable plans is the key to making things happen and help people and businesses through this unprecedented time; It is time to change the way we do business, along with the support of the government. The viability of private businesses in many sectors depends on how quickly and sustainably demand for goods and services recovers. This makes preserving employment a key priority. The faster recovery of growth will depend on preserving demand and jobs.

The coronavirus pandemic will eventually end and business activity will recover. Only then will it be possible to understand the true extent of the economic impact of Covid-19, which will probably take a long time to overcome. In the meantime, businesses must keep monitoring emerging issues and manage the risks they face with agility that comes from improved awareness.

Subscribe to The Journal

* indicates required
Areas of Interest

Pragma International will use the information you provide on this form to be in touch with you and to provide updates and marketing. Please let us know all the ways you would like to hear from us:

You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

Article Rating: 
Average: 4.7 (6 votes)
Total reads: 835
Theodoros Kringou FCG's picture

A self-motivated entrepreneur with a proven record of high revenue growth and market share for a growing services solution company. Achievements range from expanding the company to a large well known international organization with an innovative and pro-active customer focused approach, to management and team development.