Source: Khaleej Times
The UAE and more particularly Dubai will remain less affected by the eurozone debt crisis due to UAE Central Bank’s balanced investment approach and minimal financial exposure in eurozone and more particularly due to dirham pegging with the dollar, a senior Dubai-based businessman said.
Speaking at an interactive discussion on the European economic crisis and its effect on Dubai, Iskander Sultan Khwaja, director of Pakistan Business Council Dubai, or PBC, told the council members that “nevertheless, the ripple effect of the crisis will somewhat take its toll.” The discussion meeting was also addressed by Mohammad Nafees and Naveed Nafees.
“The eurozone debt crisis is the new reality with repercussion much too far-fetched than initially understood. It is very important that we know the events surrounding this crisis, prepare ourselves, strategise and implement in our day to day operations to face it up head-on,” he added.
Iskander said that the GCC region has also slowed mergers in the region and reduced volume of stocks trading on local exchanges. As of July 2011, there are 808 registered financial firms in the Dubai International Financial Centre alone and have full-time staff strength of 11,330 regular employees. “In contrast to my personal views and belief, there is a threat that eurozone banks will restructure their operations in the UAE and are likely to undergo job cuts which might slightly affect consumer spending behaviour,” Iskander said.
Though, increased public spending and oil output will help economies in the Middle East to expand faster than initially forecast according to the World Bank as it raised its 2011 growth estimate for the region to 4.1 per cent from 3.6 per cent, he said.
He said that Dubai’s credit risk dropped over the past two years due to debt restructuring deals but bond repayments and profitability at companies boost confidence in the emirate’s economic rebound.
Despite that, the general emphasis persists that renewed global economic concerns and eurozone crisis will further delay recovery of Dubai’s property market although better volumes and slight increase in prices at few property transactions have been witnessed.
Iskander said: “Nevertheless, the situation warrants that we adopt a balanced approach toward not only our businesses but our way of life, resort to prudent policies and investments aimed at optimised resource and operations management.”
“I will emphasise that by adopting balanced approach, not only our business will have a competitive advantage but will also be bitterly tuned to face any challenges in the backdrop of the engulfing eurozone debt crisis,” he said.