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United Arab Emirates Business Forecast Report Q2 2010Published by: Business Monitor International Published: Feb. 5, 2010 - 68 Pages Table of Contents
AbstractDubai’s debt problems will continue to dominate the economic agenda throughout 2010. At the timeof writing, Dubai World was still engaged in negotiations with its creditors regarding a standstillagreement, credit markets were still jittery and the outlook remained poor for the property sector.The assumption of government support for quasi-sovereign corporate entities - which underpinnedinvestor sentiment towards Dubai and the UAE as a whole - has been thrown into question and itwill take time for the markets to reassess the risks associated with doing business there. However,with its oil wealth and more stable banking and property sectors, Abu Dhabi’s economy clearlylooks in better shape than Dubai’s.This economic strength is already translating itself into greater political power. Abu Dhabi’s financialbailout of Dubai, and the manner in which it was conducted - at the last minute, following two weeksof global financial turmoil - has illustrated to the world where power lies within the UAE federation.In return for its assistance, we expect Abu Dhabi to initiate moves towards a closer union ofthe seven emirates, in order to more closely align their economic policies. This will include morechecks and balances at the federal level of decisions made by executives at the emirate level; inpractice, it means greater control by the al-Nahyan family over the actions of its neighbours. In terms of GDP growth, we expect the UAE’s headline figures to return to positive territory in2010, after an estimated contraction of 2.7% in 2009. However, this relatively robust figure masksa shifting pattern of growth below the surface. Dubai’s economy will remain in the doldrums, withinvestment at a virtual standstill and credit markets still largely frozen, while Abu Dhabi expands,thanks in large part to a buoyant international oil market. As a result, Dubai’s share of the UAEeconomy will shrink, reversing the trend witnessed throughout most of the past decade. T he fallout from the Dubai crisis will also be felt in the business environment, although the impactshould be largely positive in the long term. The strength of the market’s negative reaction to DubaiWorld’s November 2009 announcement highlighted the need for greater transparency, not tomention stronger regulation of state-owned firms. Some improvements were already under way,such as the publication of a wider range of economic data, on a more timely basis, and these willcontinue. Other measures include enhanced control over debt issuance and increased regulationof real estate professionals. Get Full Details About This Report >> |
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