Beyond grappling with the global public health crisis sparked by the COVID-19 pandemic, governments the world over are doing what they can to mitigate the economic fallout from lockdowns and social distancing.
Already, the stock markets have witnessed the kind of downturn not seen in a generation. The Middle East was no exception. Even the wealthy nations of the Arabian Gulf have been hard hit by plummeting oil prices. The purchasing Managers’ Indexes which look at prevailing economic trends have been reaching record lows.
UAE's big bazooka
From mid-March, the UAE Central Bank moved to protect the economy, buffering banks and businesses with an economic support scheme worth around 65 billion euros. This took the form of collateralized loans to banks at zero cost in order to encourage lending. And freeing up cash from ‘capital buffers’ which are the banks’ mandatory rainy day funds.
"The Central Bank of UAE has announced about 70 billion dollars of which is equal under, what, 17 percent of GDP in terms of relief measures. And this is to get additional liquidity in the banks," says Anugrag Bajpai, Partner & Head of Retail, at KPMG Lower Gulf.
Ahmed Abdelaal, CEO of Mashreq Bank, insists the move by the UAE's lender of last resort has been targeted.
"The package is directed at retail, SMEs in particular, and the most impacted sectors within the corporate world as well. And whether you are a personal loan or a mortgage loan owner or an SME or a corporate life, you are benefiting a lot from these fees."
'Business as usual'
According to a recent survey of financial lenders, these support measures have instilled considerable confidence. 42% of respondents in the UAE said they believed their companies could go back to ‘Business as usual’ within 3-6 months.
Similarly, 64% of respondents here were ‘very confident’ in their company’s ability to build skills for the future compared with just 48% globally.
In the UAE, as elsewhere, some sectors experienced an unprecedented slump in demand, but others saw a huge spike.
"We've seen numbers across the board, be it a grocer, be it at a fashion retailer, an electronics retailer. Your online sales numbers, online sales numbers have increased exponentially. So, in a way, it's accelerated a trend that was already there,'' says Anugrag Bajpai.
Investing for the future
Entire sectors have had to adapt and move their businesses online. And mobilising the latest technology has been vital in assessing the risk to both public health and the economy.
"We could see a sort of smart lock down for certain areas, in the UAE. The investment in the healthcare sector, the investment in crisis management, risk management, investment in artificial intelligence, data analytics are a must for the future," explains Tareq Al-Dawoud, a risk management specialist.
The coronavirus pandemic has also led to widespread reflection on the nature of the infrastructure upon which the global economy is built. Moving forward experts are optimistic that the change the crisis is forcing will in the long-term be beneficial for both the economy and humanity.
"Our biggest trade partner for non oil trade is China. This trade got impacted because of the challenges and the logistical challenges globally, which shows you that we need to take into consideration supply chain diversification, in-country production, and a combination of both will make it more of a successful formula, but the biggest learning curve out of the pandemic is how us as humanity can co-ordinate and make big decisions,'' insists Khalfan Belhoul, CEO, Dubai Future Foundation.