International Finance

UAE relies heavily on the business of oil and tourism; they are providing 5.8 percent of the oil to other countries in the world. Saudi Arabia is the biggest provider and seller of oil in the world. UAE is earning money by transportation and tourism, the pandemic has a drastic effect on the economy already and the transportation is ban as there are many cases in UAE, the country earned 19.5 $ billion in 2019 by air transportation and it is around 5% percent of GDP last year. It is expected that the UAE GDP will reduce to 2.5 % this year. It is noted that the Dubai Financial Market (DFM) index is reduced to 2.36 percent (40.79 points) to 1,682.08, while the Abu Dhabi Securities Exchange (ADX) dropped 2.18 percent to 3,676.46 points. "The government is making plans to announce financial support and the firms have a chance to receive additional debts.

The import and export figures of Gold are very important for UAE because UAE is the major country to import the unwrought gold and they export it in semi-worked and jewelry form that is 25 percent of their total export. The import and export can affect the economy as there is no trade going on in the world, India is on top to purchase the Gold from UAE. If the Gold prices push higher and the rupee falls the major threat is that Indian migrant workers would stop investing in the business. They are many in numbers and if they would send their money to home instead of investing it will reduce the import and export.

The Oil prices are dropping and the import and export reduction can result in dropping the currency value of UAE, they are earning money by tourism and air transport the pandemic already reduces the activities so there are many chances that the currency of UAE would badly fall if they would not control the pandemic on time. Tourism and Air transport is a total of 11 % of the total GDP of the UAE, it can drastically fall. The companies and banking sector are already affected so there are many chances the currency may lose its value. UAE have to reduce their tourism and air transport prices to overcome such issues in time.

Measures

 UAE has to take serious steps to overcome such issues, the biggest issue can be unemployment because of a reduction in trade and tourism. The UAE government should focus on making plans to help needy people and employers who lost their jobs, the countries like the USA and Denmark are creating a trillion dollars budget for the people who lost their jobs. UAE has the most job holders are from India and Pakistan if they delay the budget plan the companies can be turned off eventually.

To overcome the pandemic and economic issues, they must focus on giving people relief so they can again in UAE for its prosperity. The banking sector must give the companies relief packages for loan repayment and they must give them additional packages to employers and companies to overcome financial issues. Top companies in the UAE must receive additional loan packages to bounce back the economy. The employers and businessmen must be given relief to start work for their country again. The overall effect causes damage to the business of banks, the banks association states that it is affecting the bank very badly as there is no business and some of the analysts suggest that it is a very good chance for the banking sector as it can provide additional lending to most affected companies and in this way, the economy can be improved.

 

References

The Impact of Coronavirus on the U.A.E Economy. (n.d.). Retrieved from https://www.fxempire.com/forecasts/article/the-impact-of-coronavirus-on-the-u-a-e-economy-642787

Ng, A. (2020, March 12). Three ways the coronavirus could have an impact on Middle East economies. Retrieved from https://www.cnbc.com/2020/03/12/three-ways-the-coronavirus-could-impact-middle-east-economies.html