The 2021 outlook for the global economy remains profoundly marked by the COVID-19 pandemic. The world economy is likely to rebound rapidly when mass vaccination becomes fully available. This will encourage both goods and services to get back to normal and people to start traveling again. In this sense, emerging markets are in better shape to benefit from the post-pandemic recovery. Middle Eastern countries, Abu Dhabi in particular, see more essential benefits for the economy. As the most rapidly-growing fintech industry, Abu Dhabi offers promising opportunities for fintech to advance further.
How the COVID-19 Pandemic Has Impacted Abu Dhabi
As elsewhere in the Middle East, the COVID-19 pandemic and the number of infected people are increasing in Abu Dhabi. Travel restrictions and lockdown measures imposed by the government have severely tied down international visitors and impacted employment and significant economic sectors. As a cost-saving measure, many businesses were forced to reduce employee wages. These salary reductions have tightened household income levels, resulting in lower disposable income and affecting demand for goods and services.
A sharp decline in global trade has also impacted the economy in the UAE, as major sectors contributing to the GDP such as hospitality, retails, and tourism were hit by the movement restrictions due to the pandemic. These pandemic threats called for quick government involvement to stabilize the economy while mitigating instability whenever feasible.
Abu Dhabi Fintech Ecosystems: Going Forward
Globally, the fintech market is foreseen to have a yearly growth of 20% for the upcoming five years. By 2025, the global fintech industry is expected to reach a market value of approximately 305 billion USD.
Given the advanced infrastructure and strategic location, Abu Dhabi is considered a perfect center for those who are targeting Asia and Africa markets, where electronic payments and digital microfinance solutions perform financial services for many people and businesses.
In making fintech a priority, the government of Abu Dhabi partnered with Abu Dhabi Global Market (ADGM), an international financial and business center in Abu Dhabi. Irrespective of the economic segment, regional focus, or the size of the business, ADGM works to ensure that tailored licenses and registration support are available to meet all needs, facilitating investor preferences.
At the start of the COVID-19 outbreak, the government of Abu Dhabi and ADGM promptly imposed measures to alleviate the pandemic impacts on its economic activities and ensure the sustainability, security, and continued development of the business.
Abu Dhabi offers a legal environment, a secure developing space, effective government engagement, and a strong commitment to a long-term strategy required by financial services to expand the innovation boundaries.
As e-commerce is expanding all over the UAE with young, tech-savvy populations who are well-adapted to technological advancement, e-commerce is further expected to increase to 7 billion USD. For the reasons mentioned above, fintech players see Abu Dhabi as a very attractive market to tap their business.
