‘Recession’ is a word that is never too far away from the mind in the UAE. 

The memories of the global financial crisis in 2008 and resulting years of recession are not quite faded. 

 Dubai, being a relatively new city in its current form, has question marks over how long the economic trajectory can be sustained for. People worry that recession may spell a sudden end to their time here. 

Recommended

OPINION: The UAE Is Quickly Set To Become The Publishing Capital Of The Middle East and North AfricaOPINION: The UAE’s Compassion For People Of Determination Knows No BoundsIndia-UAE Travel Ban: Why I Decided To Fly From Delhi To Dubai Onboard A Charter Flight

It’s been said, more than once, in conversation over the past 12 months that Dubai is in a recession that no one is taking about. 

The reasons for that are known macroeconomic trends, such as the drop in oil price and continued unstable geopolitical landscape in the region. 

That, and the harsh reality of people losing their jobs due to company cutbacks, and we have seen this past month that credit card applications have risen by 60% in the past year. 

So, is Dubai in a recession?

Very simply, Dubai is not in a recession. A recession is when an economy does not grow year on year. Should an economy grow by less than the previous year, that is still growth, not a recession, known as a regression. 

The growth of an economy is measured by GDP (Gross Domestic Product), that is the sum of all the goods, services and produce of the entire economy.

What are the stats?

The UAE economy grew by 2.7% in 2016, that represents an increase on 2015. The projection for growth for 2017 was initially 3.5%, however that has been revised to 1.5%. This indicates an economic contraction. 

However, to put that into prospective, US, UK and Germany economies all only grew by 2.1%, 1.8% and 1.9% respectively last year. 

In addition, the economy grew by 3.9% in 2015 and is expected to grow by 2.5% in 2017, increasing each year to 2020 when it is expected to grow at 4-5%. That will be one of the fastest growing economies in the world. 

How to prevent a recession?

If people spend more this year, than the year before, then there is more business done in general, so the economy grows. 

Last year we saw a lot of government stimulus in the services industry such as the opening of new parks and resorts. 

That creates jobs, generates marketing spend and encourages expenditure. 

Usually, in a recession, the government can either introduce measures of austerity, such as more levies and fees on all services, therefore making sure at least that the country is generating revenue, however, that will also ensure that people have less surplus cash, so they won’t be able to spend. 

Therefore businesses will close and people will lose jobs. 

What does this mean for you?

In all of this, you have your own personal economy. So you should assess first whether you have confidence to spend. Do you have job security, do you see the your own prosperity in the future, if so, you can make decisions against that. 

It’s it’s uncertain, then you should take your own austerity measures. Budget, cut back on unnecessary spending. 

Like governments, it’s okay to go through a period of less spending, until the situation improves and you can spend more.