The UAE’s gross domestic product will grow 2.4 percent this year and 3.8 percent in 2022 as the economy recovers from restrictions imposed during the Covid pandemic, the central bank said on Thursday.

“The Targeted Economic Support Scheme [Tess] has been effective in mitigating the risks posed by the pandemic by ensuring a continued flow of credit and helping affected individuals and companies to overcome temporary debt repayment difficulties,” the apex bank said.

In the non-oil sector, the GDP will expand by around four percent in the current as well as the next year, the Central Bank of the UAE said its Financial Stability Report.

The regulator has extended access to the Dh50 billion zero-cost liquidity facility under Tess until the end of June 2022 to help cushion the impact of the Covid-19 pandemic on the economy.

“In line with the UAE’s robust mitigation measures, including a swift rollout of Covid-19 vaccines, the central bank has worked tirelessly to ensure that vital sectors of the nation’s economy are able to withstand this crisis. The central bank’s introduction of Tess came at the right time, ensuring that banks could mitigate funding and liquidity pressures and maintain their lending capacity, resulting in the provision of necessary aid to individuals and corporates alike,” central bank governor Khaled Mohamed Balama, adding that the support is ongoing as most support measures provided by the central bank will remain in place through 2021.

The report determines that the UAE banking sector remains resilient, with sustained lending capacity. The effects of the pandemic resulted in banks’ higher impairment charges, lower operating income and reduced profitability. The aggregate capital and liquidity buffers remain well above the regulatory requirements.