Dubai financial progress at its slowest since 2009 debt disaster – Information by Automobilnews.eu


Dubai financial progress at its slowest since 2009 debt disaster

Dubai’s economic system grew 1.94 p.c in 2018, the federal government mentioned on March 27, hitting its slowest tempo since a contraction in 2009 when the economic system was hobbled by a debt disaster.

Dubai, which has a diversified economic system that focuses on tourism and worldwide enterprise providers, has been harm by a tough patch amid a downturn in its actual property market.

“A weakening exterior backdrop, a powerful US greenback and the continued correction within the property market are headwinds for numerous very important sectors,” mentioned Monica Malik, chief economist at Abu Dhabi Business Financial institution.

The economic system slowed from 3.1 p.c progress in 2017, revised authorities information confirmed. The 2017 determine was revised from the earlier progress determine of two.Eight p.c.

Property costs in Dubai have fallen by greater than 1 / 4 from their peak in 2014. S&P mentioned final month it expects costs to fall one other 5-10 p.c this 12 months attributable to a continued hole between provide and demand, earlier than steadying in 2020.

Dubai wanted a $20 billion bailout from oil-rich Abu Dhabi to flee a debt disaster in 2009 brought on by collapsing property costs, which had threatened to drive some state-linked firms to default on billions of {dollars} of debt.

Analysts count on some financial restoration for Dubai forward of 2020 when the town hosts the World Expo occasion.

The federal government mentioned GDP progress was largely pushed by the efficiency of commerce associated actions, which grew by 1.Three p.c in 2018 from a 12 months earlier, representing 18.1 p.c of the full progress achieved final 12 months. In 2017, wholesale and retail commerce grew 0.9 p.c.

It mentioned actual property exercise grew 7 p.c in 2018 and accounted for almost 25 p.c of complete financial progress.

The actual property sector progress was revised to 4.Four p.c in 2017.

Progress within the transport and storage sector slowed all the way down to 2.1 p.c final 12 months from a revised 8.Four p.c in 2017.

London-based Capital Economics in a report mentioned the property sector is more likely to stay within the doldrums whereas a weak point within the world economic system will weigh on Dubai’s manufacturing and logistics sectors.

However this must be greater than offset by a step-up in preparations for, and the internet hosting of the 2020 World Expo, it mentioned.

Officers have beforehand estimated that Expo will present a lift to the economic system equal to $38 billion, or 33 p.c of GDP.

Capital Economics is forecasting GDP progress of three.Eight p.c this 12 months earlier than a pick-up to 4.5 p.c in 2020.

But it surely additionally warned foremost dangers to the outlook stem from long-standing debt issues, citing IMF information that present that the debt of Dubai’s government-related entities (GREs) – which had been on the coronary heart of the Dubai’s debt disaster in 2009 – amounted to $60 billion, equal to 50 p.c of Dubai’s GDP.

“Debt restructurings in 2014 have masked the issues in recent times. However round half of GRE debt is because of mature between now and 2021,” mentioned Jason Tuvey, senior rising markets economist at Capital Economics.

“We’ve warned earlier than that the chance of overcapacity after the World Expo signifies that the GREs may face weaker-than-expected revenues, harming their capacity to service these money owed,” he mentioned.

Abu Dhabi is anticipated to roll over for the second time $20 billion of debt, due this month, that it prolonged to Dubai throughout its monetary disaster a decade in the past, Reuters reported final month citing three sources accustomed to the matter mentioned.

Dubai financial progress at its slowest since 2009 debt disaster – Information by Automobilnews.eu


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