23 March 2021
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UAE launches new industrial development strategy

The UAE launched a new industrial development strategy on Monday, which aims to more than double the size of the sector over the next decade to AED 300bn

By Khatija Haque


  • The UAE launched a new industrial development strategy on Monday, which aims to more than double the size of the sector over the next decade to AED 300bn. This will be achieved through legislative reforms, including the recently approved 100% foreign ownership limit, and other incentives to boost investment and research & development. Additional financing will be made available to support SMEs in the sector and the strategy will focus on developing new high-tech industries in the UAE, including biotech, meditech, pharmaceuticals, clean energy and space technology.  In addition to boosting productivity and creating jobs, the strategy should reduce the UAE’s reliance on imports.   Separately, Dubai FDI signed a memorandum of understanding with the Manufacturers’ Association of Israel to promote bilateral collaboration and investment.
  • The Biden administration infrastructure plan could be worth another USD 3tn, according to Bloomberg reports, with investment in “green” spending, human capital, healthcare, and social care.  The spending would be spread over many years, and paid for by higher taxes on corporations and wealthy individuals.  More details on the proposals are expected next week.
  • Jerome Powell reiterated that the recovery in US economy “is far from complete”, despite recent improvements.  His prepared remarks came before today’s testimony before the House Financial Services Committee. Treasury Secretary Janet Yellen will also testify in the hearings to assess the economic policy responses to the Covid-19 crisis.
  • Existing home sales in the US declined by a bigger than expected -6.6% m/m (-29.5% y/y) in February to 6.22mn, the lowest level in six months. The drop reflects fewer properties available for sale, according to Bloomberg, as demand remains strong and prices are rising (+3.1% m/m and 15.8% y/y).   
  • The ECB stepped up its asset purchases last week, buying EUR 21bn under the PEPP up from EUR 14bn the previous week. Weekly purchases of assets under the PEPP have averaged EUR 18bn since the programme began.
  • The US, UK, Canada and the EU have all imposed sanctions on China over its treatment of Uyghurs.  The sanctions target a number of Chinese nationals and entities. While the move is largely symbolic, it does reflect a more co-ordinated response to China under the new Biden administration.  China has responded with reciprocal sanctions.  
  • The IMF estimates that Bahrain’s economy contracted -7.0% in 2020, the fiscal deficit widened to -18.2% of GDP and the stock of public debt rose to 133% of GDP. The figures were released at the conclusion of the 2021 Article IV consultation.  The Fund expects the twin current account and fiscal deficits to persist over the medium term and projects debt-to-GDP will rise to 155% by 2026 in its baseline scenario. The Fund stressed that additional fiscal measures beyond the current budget will be needed to put debt on a downward trajectory.

Today’s Economic Data and Events

11:00 UK ILO unemployment rate (3m to January): forecast 5.2%

15:50 Bank of England’s Andrew Bailey to speak

18:00 US New Home Sales (Feb) forecast 870k (-5.7% m/m)

20:00 US House Committee on Financial Services – Jerome Powell and Janet Yellen to speak

Fixed income

  • Benchmark government bonds were higher across the board at the start of the week as inflation anxiety abated and managed to gain even with a move higher in equity markets. The UST curve bull flattened with yields on 2yr USTs marginally lower while the 10yr yield fell nearly 3bps to 1.6946% and is trending further downward today.
  • In emerging markets, Turkey took all the attention after the surprise dismissal of the previous CBRT and his replacement by a reported rate dove. Yields on 2030 maturity Turkish government bonds soared more than 400bps overnight to push above 18%. However, the sell-off was mainly restricted to Turkish bonds as Indian and South African yields actually closed lower.  


  • The dollar recorded a mixed performance across major pairs and ultimately the DXY index ended down 0.2% overnight at 91.742. Most of the losses came thanks to a stronger EURUSD pair, up 0.24% a 1.1933 despite Germany announcing it would impose more lockdown measures over upcoming holidays. USDJPY also sank although the gains for the yen there were muted at less than 0.1%.
  • Elsewhere, AUD stood out among commodity currencies as the only notable gainer. AUDUSD rose 0.05% to close at 0.7746 while CAD and NZD both fell against the dollar.
  • In emerging markets all eyes again were on Turkey where USDTRY settled up more than 8% at 7.8016. That represented a relative improvement intraday, however, as TRY opened up at well over 8.4 against the dollar. Performance elsewhere mixed with ZAR treading water and INR appreciating modestly.  


  • The Borsa Istanbul 100 was the big loser yesterday on the back of the fallout from TCMB Governor Naci Agbal’s dismissal. The index dropped -9.8% yesterday, with losses widespread across all sectors.
  • Elsewhere, equity markets were broadly positive, although the renewed spike in Covid-19 cases in Europe hit some of the reopening trade seen in recent weeks. In the UK, travel firms were notable losers, but the FTSE 100 managed to gain 0.3% overall. On the continent, the CAC lost -0.5% while the DAX gained 0.3%.
  • All three major indices in the US closed higher yesterday, with the tech-heavy NASDAQ back in favour and closing up 1.2% - although it remains -1.2% off the levels it was at a month ago. The Dow Jones and the S&P 500 added 0.3% and 0.7% respectively.


  • Oil prices recorded some modest gains at the start of the week but are still beset by demand anxieties. Brent futures gained 0.1% to settle at USD 64.62/b while WTI was up by 0.2% at USD 61.55/b.
  • Gold failed to move higher in response to lower yields and was lower by 0.4% at USD 1,739/troy oz. Precious metals across the board closed lower while industrial metals were the relative outperformers with LME copper holding above USD 9,000/tonne and nickel adding more than 1% to close at USD 16,463/tonne.


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Written By

Khatija Haque Head of Research & Chief Economist

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