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Is the money flow slowing down?
While remittances to places like India and Pakistan could be hit by the debt crisis in Dubai, the Philippines says it doesn’t expect any declines in money transfers.
December 3, 2009 2:54 by Aarti Nagraj
Dubai’s debt problems could adversely affect exports and remittances to India, according to a research by India-based HDFC Bank on Wednesday.Late last month, the emirate announced a six-month debt standstill for the public conglomerate Dubai World and its property arm, Nakheel. Dubai World is estimated to have debts of around $60 billion.
“The ongoing crisis in Dubai will impact specific pockets of the [Indian] domestic economy and what may seem negligible at an international level may translate to significant damage for specific segments of the economy,”said HDFC.
According to the report, the Gulf accounts for around one third of total remittances into India, with the UAE accounting for 10-12 percent.
“While we are already expecting a decline in private transfers this year, Dubai’s debt crisis means that private transfers could come under additional pressure and impact states in the South such as Kerala,” the bank said.
India’s Finance Minister PranabMukherjee also said last week that the situation in Dubai could lead to a decrease in remittances.
Neighboring Pakistan may also see a slowdown in remittances from the UAE because of the debt situation in Dubai, say local papers. Pakistanis in the UAE sent home $680 million between July and October this year, out of the total remittances of $3.9 billion received by the country during that period.
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