Al Manara Rd. 1, Warehouse #3, Al Quoz Industrial Area 1, Dubai, UAE

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Al Manara Rd. 1, Warehouse #3, Al Quoz Industrial Area 1, Dubai, UAE

Effects of Covid-19 on Dubai Economy

December 15, 2020

The Covid-19 pandemic has been destructive for all economies worldwide causing the global economy to dive deep into recession and crisis. Dubai is one of the economies that were severely hit due to Covid-19 as the Dubai economic department recorded depreciation in Dubai GDP. The pandemic hit worst on Dubai’s travel and tourism industry that used to generate large amounts of revenue before, but due to the worldwide restrictions on traveling across borders the travel and tourism industry was forced to shut down. Let’s further explore Covid-19 effects on the economy of Dubai.

Covid-19 caused the travel and tourism industry to shutdown:

Dubai is known to be the hub of tourism as thousands of people travel to Dubai throughout the year to enjoy and experience the cities extravagant architecture and royal lifestyle which results in the generation of a large amount of revenue each year. However, Due to Covid-19 International and regional traveling was banned and most countries including Dubai went into lockdown mode. Various airlines like the United Arab Emirates were forced to lay off their employees to be able to survive and the closure of businesses based on the travel and tourism sector gave further rise to unemployment.

Closure of Hotels and Restaurants:

Did you know that at the start of the year when Covid-19 forced Dubai to go into lockdown mode, around 70% of restaurants and hotels were expected to close down within 6 months.

Dubai is known for having one of the most extravagant 5-star hotels and restaurants that used to be booming with tourists before the pandemic but Covid-19 wreaked havoc on the hospitality industry due to the restrictions imposed by the government aiming to tackle the spread of the virus these 5-star restaurants and hotels and other small businesses like catering services and event planning companies had to shut down. This resulted in thousands of small and big companies’ shutdown forever as they were unable to afford to reopen.

The decline in the trade and logistics industry:

Dubai, UNITED ARAB EMIRATES: A cargo ship is docked at Jebel Ali port in Dubai 14 March 2006. Dubai Ports World, owned by the United Arab Emirates government, announced on 09 March it would sell its newly acquired rights to operate six US port following overwhelming opposition to the deal in the US Congress. The free trade zone of Jebel Ali is some 40 kilometres (25 miles) from Dubai’s centre. AFP PHOTO/RABIH MOGHRABI (Photo credit should read RABIH MOGHRABI/AFP/Getty Images)

 International trade was forced to shut down due to the rapid growth of the virus which negatively affected Dubai’s trade and logistics industry. Major supply chains in the transportation and logistics industry were constrained to closedown till the situation got better. These factors played a huge role in the decline of Dubai’s economy as the country suffered a huge loss of revenue.

The decline in the real estate market:

The real-estate Industry of Dubai was crudely hit in 2009 due to the global economic slowdown. However, the industry had started to do well in the progressing years. But, due to Covid-19 the residential prices and rents in Dubai faced a decline along with a decline in foreign investment. People started to focus more on saving money rather than spending it on investing in property as the future was unexpected and unemployment was on the rise. These factors further contributed to the long list of the reasons behind the negative impact of Covid-19 on the Dubai Economy.

Already High Debt burden worsened:

Dubai’s gross general government debt is expected to escalate by around 77% of GDP in 2020 due to the coronavirus pandemic. This increase in debt is mostly the result of the depreciating GDP due to all the factors that we discussed above along with the low oil prices. Dubai and other countries facing huge losses and debt burdens have been left wondering about how long will the negative impact of the Covid-19 pandemic last on the economy. However, the recent discovery of a promising vaccine gives hope of a road to recovery to all the economies worldwide that have been negatively impacted due to the pandemic.


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Al Manara Rd. 1, Warehouse #3, Al Quoz Industrial Area 1, Dubai, UAE