The UAE’s soaring demand outstrips inflation woes

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The economic success story of Dubai and the UAE has prospered when much of the world has been battered by global economic headwinds. 

This is a tale that has repeated itself over the 30 years that I’ve been visiting or living in the UAE, whether it be the Gulf War, 9/11, the coronavirus pandemic and most recently the Ukraine war.

In spite of all the obstacles, the leadership of the UAE and its private sector have found ways to navigate economic crises – whether by managing demand or supply.

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For example, when the coronavirus was emerging as a crisis of global proportions in February 2020, I remember sitting in a meeting where feedback was being sought on the ability to continue supplying stock. 

Since it was close to Chinese New Year, most factories that we deal with had produced surplus inventory before they shut down for their extended holiday.

 However, the challenge was getting stocks to Dubai. Most international airlines had stopped flying into China and Chinese airlines weren’t flying out anymore.

Emirates Airlines cargo service continued to operate as they knew China needed to import at that stage in time, and for those who needed products from China, there were few options.

This is one of the reasons why most essentials continued to remain available in the UAE when the rest of the world struggled to keep its shelves full.  

When as a retailer, you know you have the support to make sure supplies remain constant, you know you can capitalise on any demand that you have. 

The crucial fourth quarter for retail in 2022 will be a bumper one for those in the UAE.

Higher oil prices do mean inflationary pressures have grown. But most of the governments in the region profit from higher oil prices, hence they’ve got more funds they can plough back in to local economies.  

There will also be a larger floating population in the UAE. Russians and Ukrainians in the Emirates will find themselves surrounded by World Cup fans who can’t get hotel rooms in Qatar so will stay in the UAE on days when they don’t have matches.

This will mean the UAE could even be the biggest beneficiary of the Fifa World Cup. We will have tourists who will shop, dine and stay in the country’s hotels and fly the national carriers of the UAE, whereas the biggest chunk of the investment has been absorbed by Qatar. 

The UAE has the supply available to cater to these visitors because of legacy investments.

When countries around the rest of the world worry about inflation, in the back of their minds is a concern that demand has slowed. In the UAE, we’ve seen quite the opposite. There is inflation but there has been growing demand which more than makes up for the rising costs. The fact is most retailers have scaled up investments in the last year.  

As we look forward to 2023, we can expect the next wave of tourists to come in from China. It is only a matter of time for when the country will be open for travel again. 

We’ve seen the impact of travel on the world in 2022 and how labour shortages impacted most popular tourist destinations.

Once the Chinese traveller gets on the plane in 2023, I expect other tourist destinations will continue to struggle to cope. The UAE, however, will be ready and so will its airports, airlines, hotels, restaurants and shopping malls.

Ashish Panjabi is chief operating officer of consumer electronics firm Jacky’s Retail LLC