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Middle East economic recovery to be gradual in 2021: IMF

Business|: Dubai: GCC’s largest economy Saudi Arabia is expected to record a 2.6 per cent growth in 2021 compared to an estimated 3.9 per cent contraction in its 2020 GDP growth and move to a faster growth of 4 per cent in 2022, according to the International Monetary Fund (IMF). The latest update of the World Economic Outlook report of the IMF has significantly revised the 2020 growth outlook of Saudi economy upwards from the October projection of 5.4 per cent. However, the IMF has revised its growth outlook for 2021 downwards from the earlier forecast of 3.1 per cent. The latest update has not included forecasts on the UAE and other GCC countries. However, the October WEO had forecast 1.3 per cent GDP growth for the UAE in 2021 compared to a 6.6 per cent contraction in 2020. Improving global outlook In its latest WEO update, the IMF has projected the Global economic growth an estimated 3.5 per cent contraction in 2020, the global economy is projected to grow 5.5 per cent in 2021 and 4.2 per cent in 2022. The latest forecasts are clearly shows an improved outlook compared to the October 2020 forecast of 4.4 per cent contraction for 2020 and a 5.2 per cent growth forecast for 2021. The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies. The global growth contraction for 2020 is estimated at -3.5 per cent, 0.9 percentage point higher than projected in the previous forecast reflecting stronger-than-expected momentum in the second half of 2020. The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, effectiveness of policy support, exposure to cross-country spillovers, and structural characteristics entering the crisis. Role of fiscal support The IMF said additional fiscal policy support set to boost activity in some countries, but most are expected to experience lower deficits in 2021. The sizable fiscal support announced for 2021 in some countries, including most recently in the US and Japan, together with the unlocking of Next Generation EU funds, will help lift economic activity among advanced economies with favorable spillovers to trading partners. However, as noted in the January 2021 Fiscal Monitor Update, fiscal deficits in most countries are projected to decline in 2021 as revenues rise and expenditures decline automatically with the recovery. Supportive financial conditions. Major central banks are assumed to maintain their current policy rate settings throughout the forecast horizon to the end of 2022. As a result, financial conditions are expected to remain broadly at current levels for advanced economies while gradually improving for emerging market and developing economies. Within this latter group, differentiation between investment-grade sovereigns (who have been able to issue external debt in large amounts in 2020) and high-yield borrowers (many of whom are constrained in their ability to take on additional debt and until recently have not accessed international markets during the pandemic) is expected to subside as the recovery takes hold. As noted in the January 2021 Global Financial Stability Report Update, markets remain upbeat about prospects for 2021, banking on continued policy support. Subdued inflation Consistent with recovery in global activity, global trade volumes are forecast to grow about 8 per cent in 2021, before moderating to 6 per cent in 2022. Even with the anticipated recovery in 2021–22, output gaps are not expected to close until after 2022. Consistent with persistent negative output gaps, inflation is expected to remain subdued during 2021–22. In advanced economies it is projected to remain generally below central bank targets at 1.5 per cent. Diverging trajectory The IMF expects the recovery path of both advanced and emerging market and developing economies to trace diverging recovery paths. Among the emerging markets, considerable differentiation is expected between China—where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery—and other economies. Oil exporters and tourism-based economies within the group face particularly difficult prospects considering the expected slow normalization of cross-border travel and the subdued outlook for oil prices. The pandemic is expected to reverse the progress made in poverty reduction across the past two decades. Close to 90 million people are likely to fall below the extreme poverty threshold during 2020–21.

GulfNews Business

UAE investors applaud regional bank results

Markets|: Dubai: UAE stocks surged on Wednesday as investors reacted positively to forecast-beating results from the country's key lenders First Abu Dhabi Bank and Emirates NBD, while assuring investors a dividend amid the COVID-19 crisis. Both stock markets of UAE climbed over 1 per cent in a clear sign of market-beating optimism, as their global counterparts stayed cautious ahead of an update on the US monetary policy package and as several industry giants were also set to release their earnings report. Abu Dhabi Security Exchange jumped 1.4 per cent, the most in the last six trading sessions. It was bolstered by gains from the stock of the country’s largest lender First Abu Dhabi Bank (FAB) - which scaled up as much as 2.7 per cent during the day, before settling up 2.5 per cent at close. The investors were upbeat as the bank chose to hand out as a generous cash profit to shareholders as it did in 2019, even as the virus continues to rattle the world economy. FAB announced a dividend distribution of 74 fils per share to its shareholders as its fourth-quarter profit rose 5 per cent and it’s full year results topped market expectations even after shrinking 16 per cent, as impairment charges rose in a year challenged by the health crisis. The lender’s rally triggered gains from other stocks, from within the banking sector and beyond, with Abu Dhabi Islamic Bank advancing 2.2 per cent and Aldar Properties rising 3.5 per cent. Dubai Financial Market added 1.1 per cent after slipping in three out of the last four sessions. The emirate’s top lender Emirates NBD led gains on the benchmark, surging 2.6 per cent after it decided not to cut its shareholders’ dividend payout. A profit distribution of 40 fils per share was announced after its net income more than halved – but beat analyst estimates, which reinforced investor confidence in the state of the bank’s finances. Like in Abu Dhabi, other companies rose as a result as Dubai Islamic Bank gained 2 per cent and telecom giant Emirates Integrated Telecommunications Company (du) traded higher by 1.1 per cent.

GulfNews Business

KPMG’s survey reveals 28% of UAE workforce needs reskilling and upskilling

Business|: Dubai: The UAE workforce may continue to see significant changes over the next one to two years. A new KPMG report revealed that nearly a quarter (23 per cent) of employees may continue to work remotely, while more than a quarter (28 per cent ) will likely require upskilling. The Future of HR in the New Reality captures the perspectives of local human resources (HR) executives on preparing their organizations and HR functions for the future. Nearly every organization is prioritizing people, as they grapple with pre-existing and new challenges exacerbated by the pandemic. Although nearly all (89 per cent) of HR professionals agreed that the function played a leading role in responding to the Covid-19 pandemic, it may be time for HR to reinvent itself. For example, considering rapid changes, HR professionals may take a different approach to measuring and improving productivity and workforce-related challenges to drive competitive advantage over the medium-to-long term, rather than focusing on short-term issues. "As HR leaders adapt to an unpredictable future, their focus tends to be on short-term firefighting to cope with immediate challenges. It is crucial to play the long game in order to thrive in the new reality. To do so, HR leaders may create a seamless, tech-enabled employee experience in a remote work environment, take ownership of the employee rebuilding and reskilling journey, and embrace analytics and data science to prove the impact of the HR function,” said Marketa Simkova, Partner, Head of People & Change at KPMG Lower Gulf. Perceptions of HR From facilitating the transition to remote working, to implementing and communicating health measures in the workplace, HR has been at the forefront of the Covid-19 crisis. While most business leaders and employees view the function’s response to the crisis in a favorable way, some decision makers believe HR needs to be bolder and prove its strategic worth. The KPMG survey shows that 62 per cent of HR executives believe the function needs to completely reimagine and transform itself to respond more effectively to future disruption. Half (50 per cent) of HR professionals agree that the function is considered to be an “administrator” rather than a “value driver.” Eighty-six percent of HR executives believe the function needs to rethink productivity and performance measures in light of the shift to remote working.

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Decrease in plot area should not be more than 5 per cent in the case of off plan developments

Property|: A recent ruling by the Dubai Courts in favour of a major real estate company in Dubai has set a precedent on how courts interpret sale and purchase agreements (SPA). The dispute was raised by the buyer purchasing a private island in the UAE, claiming that he had discovered that the plot area was 50 per cent less than what was written in the SPA contract and that he was not aware of it. Wael El Tounsy Wael El Tounsy, counsel and head of real estate litigation at Baker McKenzie Habib Al Mulla, Dubai Office, the legal firm that represented the seller (the real estate company) in this case, says the court dismissed that claim for several reasons. “Part of the sold islands is in land, and the other part is in the water. Also the area of the island, according to the maps of the main developer and the measurement of the sold area, is decreased by 1 per cent, which is acceptable. The contracting ocurred after the buyer’s inspection of the island and it is written down in the contract that the sale of the land was on an as-is basis; and finally, the title deed issued by DLD confirms the area,” says El Tounsy. “In this case the plot area has not changed from what is set forth in the SPA. The buyer was claiming that he did not know that a percentage of the sold area was the land around the island submerged by the water. When it comes to off-plan purchase of residential units, developers take precautions by providing that the area is subject to increase and decrease. However, the law resolved that while the increase in plot area is free, the decrease should not be any more than 5 per cent, and the buyer may demand a price reduction or an annulment of contract, if necessary,” he explains. “The claim that the area is different is invalid because the area is a part of the land plus the water area surrounding the land, which can be built on. Therefore, the court confirmed the invalidity of the allegations of the buyer in this regard,” says El Tounsy. Registering the SPA El Tounsy says for those purchasing off plan property SPA contracts are registered in the interim register at the time of off-plan sale, since the date of signing the agreement. Both buyer and seller can register the contract, but the law provides that it is the liability of the seller to register. The seller has the chance to register the SPA at any point prior to the closure of submissions before the Court of Appeal, he explains. The buyer can undertake the registration if there is no rejection by the seller. SPA while buying off-plan So when homebuyers are planning to buy off-plan, what should they keep in mind about the SPA? El Tounsy says, “The buyer shall ensure that the agreement includes the most essential conditions for it as an explicit annulment condition. In other words, if the delivery date of the unit is very important for the buyer, it can be mentioned in the agreement that the contract shall be automatically terminated if the developer does not commit to delivery on a certain date. The same applies to any other conditions that the buyer deems as important for it. It should be included in the contract or should include a penalty clause in the agreement if the developer violates same.” “The law has put in place many guarantees to avoid any problems. The escrow account allows the buyer to put the instalment in the account. The seller or developer can only disburse it under the supervision of DLD, which checks the completion rate in order to allow the disbursement. With regard to the difference in the executed designs from what is set in the SPA, the buyer can take precautions by stipulating the conditions in the agreement. Evetually, if the buyer finds a fundamental difference between what has actually been implemented and what had been contracted for, it has the right to either claim a decrease of the price or the termination of the agreement. The judge is authroised to terminate the agreement and decrease the price.