ISLAMABAD: The Pakistan Economy Watch has said that international financial turmoil and receding oil prices have shaken the oil-rich Arab nations with Dubai among the worst hit.
Dubai, known as the safe heaven among investors, traditionally relies on realty, tourism and financial sectors that are badly hit due to global recession. It is no longer regarded as financially invincible and its boom is under threat, said Dr Murtaza Mughal, President Pakistan Economy Watch.
Dubai’s debt is much more than GDP, which is soaring at an alarming rate creating new financial challenges. The federal and state governments are also keeping critical data secret, which is adding to nervousness of investors.
Mughal said the situation had the pushed international and local investors to withdraw a minimum of 60 billion dollars from Dubai and flight of capital continued. He cautioned that Pakistanis should be vigilant before making any new investments.
Dubai has asked the UAE and Abu Dhabi, the richest among the seven units, for help but could get only 33 billion dollars. Some big international concerns, including banks, finance houses and developers have realized the situation and altered major investment plans. “Some institutions have dropped idea for investment in Dubai while others have started mergers,” he said, adding that the local property giants had started firing their employees.
Lending to the property sectors amounts to 17-20 percent of the total loans issued by the banks in Dubai and some banks are feeling pressure of the situation. The international turmoil has also cut the number of visitors to Dubai which is yet another blow to the city-state which saw the boom on weak foundation.
Source: The News, 23/10/2008