How positive are you?
The UAE’s political and business heads are confident that Dubai is still strong and will emerge even stronger after the financial crisis. Do you agree?
March 3, 2009 11:16 by Aarti Nagraj
The UAE’s Minister of Economy, Sultan Bin Saeed Al Mansouri recently told Reuters that he was “comfortable” about the situation of the UAE economy. He said that the measures taken by the government so far to help Dubai through the economic downturn should be sufficient to stabilize its economy for at least nine months.
“I don’t think there will be recession in the UAE,” he said.
“Believe me, it (the recovery) will be sooner than many people predict,” Sheikh Nahayan bin Mubarak Al Nahayan, the UAE Minister of Higher Education and Scientific Research said last month in an economic forum in Dubai.
“We are fortunate that our government has taken many steps to address the issue” of the economic slowdown. “These policies have kept our country in a reasonably good shape in face of the crisis,” he added.
The Middle East and North Africa region will outperform the rest of the world in 2009 even amidst the global economic crisis, said Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry, in a report published by Gulf News.
Unfortunately, Kipp is having a hard time digesting all that positivity. Here’s why:
The Financial Times reported that economists at National Commercial Bank, Saudi Arabia’s largest lender, predict that $250 billion worth of projects have been cancelled or delayed in the UAE so far, the majority in Dubai.
Saud Masud, a UBS analyst, also told the paper that he estimates defaults by property investors in Dubai to cost developers up to $25 billion over the next two years.
The Dubai government has around $80 billion in debt, out of which between $15-20 billion are due for refinancing this year.
The number of people being laid off is increasing everyday, and spans across sectors: property, banks and media.
And what has the government done so far?
The Dubai government recently launched a $20 billion dollar bond program, out of which it has sold $10 billion to the UAE central bank.
In September 2008, the UAE central bank launched an AED120 billion package to help banks increase their liquidity.
Developers in Dubai have access to $2.2 billion from escrow accounts to cover construction commitments, Dubai’s Real Estate Regulatory Agency (Rera) said last week.
Mansouri also said that the UAE has set up committees at the federal and local levels to help tackle the financial crisis.
So, what’s your verdict?