Dubai, the Middle East's trade and tourism hub, has been hit hard by coronavirus-containment measures and is set for an economic contraction almost four times worse than during the global financial crisis in 2009, S&P said. Abu Dhabi in the same month announced a $27 billion emergency stimulus plan to aid private sector businesses and banks.The UAE's central bank also deployed a $70 billion package to help commercial banks provide debt relief. We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services. It said real estate activity grew 7 percent in 2018 and accounted for nearly 25 percent of total economic growth. But the global pandemic will likely exact a toll on Dubai far greater than the downturn of a decade ago. Co-author of the award-winning book The WSJ Guide to the 50 Economic Indicators that Really Matter. Dubai's financial crisis: a Q&A Dubai, the gulf emirate that has grown explosively over the last decade, is now at the centre of markets' attention on fears that it could struggle to repay its debt.
That crisis, more than ten years ago, was sparked by a property crunch that forced Dubai to seek a $20 billion bailout from its wealthier and more conservative neighbor, UAE capital Abu Dhabi. In a similar way to Singapore and Hong Kong in the far east, Dubai has set itself up as a trading hub in the Gulf, benefiting from the flow in international trade. According to the Financial Action Task Force (FATF) 2020 evaluation on the United Arab Emirates (UAE), the UAE has twenty-nine commercial free zones and two financial free zones. Additional reporting by Davide Barbuscia; Editing by Toby ChopraFILE PHOTO: General view of Dubai's cranes at a construction site in Dubai, UAE December 18, 2018. At the time Dubai needed a massive bailout, which was provided by the National Bank of Abu Dhabi (located in UAE's capital Abu Dhabi) This bailout was intended to calm investors who were uneasy about the fact that some of Dubai's government-related entities (GRE) had started defaulting on debts. London-based Capital Economics in a report said the property sector is likely to remain in the doldrums while a weakness in the global economy will weigh on Dubai’s manufacturing and logistics sectors. But this should be more than offset by a step-up in preparations for, and the hosting of the 2020 World Expo, it said.
Brent crude oil, the European benchmark, fetched more than $100 a barrel in mid-2014 versus around $65 recently, The slowdown in global trade hasn't helped Dubai either. The real estate sector growth was revised to 4.4 percent in 2017. )Fast forward, and now the loans made to Dubai are coming due, so Abu Dhabi's government and the UAE's central bank have agreed to extend the loans on the $20 billion debts for another five years.Unfortunately, the loan rejiggering doesn't solve Dubai's problem. Residential property prices had already fallen 30% from their 2014 peak amid oversupply and weakening demand, and revenue per available hotel room was down more than 25% since 2015. Dubai Culture focuses on establishing Dubai as a regional and global centre for creativity, and also seeks to enhance the city's cultural identity in order to drive the creative economy. ""Dubai Government continues to monitor and offer support where necessary to help all of Dubai's business community during this time," a Dubai Chamber spokesman said in the hours after the survey's release.The coronavirus crisis follows a number of years of declining revenues for some of the emirate's most important sectors, primarily real estate and hospitality. The comparatively richer Emirati capital Abu Dhabi is tipped to rescue Dubai, as it did after the 2007-08 financial crisis. Sharjah Islamic Bank PJSC 2Q-2020 financial results DP World Crescent Limited 23 Jul 2020 DP World Crescent Limited – Profit Distribution (USD 500,000,000 3.7495 per cent Bond due 2030) Some 74% of travel and tourism companies said they expected to close in that time, and 30% of companies in transport, storage and communications expect the same fate.
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