The leaders and high officials of the United Arab Emirates again stressed the strength of Dubai and UAE’s economies even as regional markets tumbled for a second day. The Prime Minister, Vice President and the Dubai’s ruler, Sheik Mohammed bin Rashid Al Maktoum said that his emirate’s economy was “strong” and solid.”
The latest credit rating of the Moody said that the credit quality of the governments of Abu Dhabi and that of the United Arab Emirates will be unaffected by current ongoing Dubai World’s debt. “The recently announced restructuring of Dubai World’s liabilities is unlikely to threaten the credit quality of the government of Abu Dhabi and the federal government of the UAE,” Furthermore, both governments are rated Aa2 with a stable outlook. Moody’s said the UAE’s high investment-grade sovereign rating is boosted by its “robust external position,” backed by huge foreign assets held by Abu Dhabi Investment Authority (ADIA), which it put at no less than 284 billion dollars.
Sheikh Mohammed termed the reaction in the local and regional markets to the news of Dubai World’s restructuring as an indication of “a lack of understanding and misperception about what is happening in Dubai.” The central bank governor of UAE immediately injected substantial funds into banking industry mitigated the negative sentiments in the financial markets.
Dubai is at the stage of take-off towards more stability and sustainability. Marco-economy of Dubai and the UAE is based on export-oriented model and moreover, recent diversification of economy has produced immense shakable strength. The recent ongoing Dubai World debt crisis would not be fatal to its over economic productivity, profitability and progression in the days to come. The ongoing economic recession and financial crunch has badly affected the global real estate which has also damaged local markets of Dubai. However, the recovery is equally strong as market rebounded amid government’s restructuring of debt of $6 billion with a maturity extending up to May 2010.
It is expected that the Dubai based companies and groups operating in Pakistan and listed in the stock market will not be affected by the crisis. Furthermore, the crisis will not have any major negative impacts for FDI and remittances inflow in Pakistan. Pakistan’s exports are less sensitive to the downturn in the UAE.
Comparative study shows that during 2008, the UAE economy recorded a growth rate of 7.4 per cent. Preliminary data issued by the Central Statistics Department of the Economy Ministry indicates that GDP, at fixed prices amounted to 535.6 billion dirhams in 2008, compared to 498.7 billion dirhams the previous year, itself a rise of 5.2 per cent over the 2007 figures. GDP at current prices in 2008 amounted to around 929.4 billion dirhams, compared to around 729.7 billion dirhams in 2007. Moreover, preliminary indicators of the country’s economic performance during 2008 have indicated that the effect of the international financial crisis on the constituents of the national economy was relatively small.
The UAE economy and its key financial indicators remained strong and resilient as the country’s leadership took a series of steps to protect the national economy and the local banking system against the impact of the global crisis. These steps included the infusion of about 120 billion dirhams (about US$32.7 billion) into the economy. This was done in two tranches: the first of 50 billion dirhams which the UAE Central Bank put at the disposal of the banks operating in the country and a second tranche of 70 billion dirhams being released to the Ministry of Finance, which was charged, together with the Central Bank, with the task of working out a mechanism to supply funds to the banking sector as and when required.