Turmoil is ripping through the euro zone and growth is flagging elsewhere in the world but for the UAE, the crisis is over, Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, says.
Crisis is over for the UAE, says Sheikh Mohammed
Turmoil is ripping through the euro zone and growth is flagging elsewhere in the world but for the UAE, the crisis is over, Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, said yesterday.
Sheikh Mohammed chose the occasion of his annual iftar with the press to make his confident estimation of the economic situation.
"The crisis is behind us now," he told a group of foreign and local media at a ceremony at the Atlantis hotel.
"Our country and our institutions managed to ride out the global financial crisis."
The UAE was hit hard by the global economic slowdown in 2008 and 2009 when property prices fell by half, Dubai World was forced to renegotiate its debts, Abu Dhabi provided US$20 billion (Dh73.45bn) in assistance to Dubai and banks revealed worrying levels of bad debts.
This year, house prices in Dubai have started to show signs of recovery while the shopping malls and hotels such as Atlantis are doing a roaring trade. Oil prices, the mainstay of the national purse, have held above $100 a barrel, a historically high level.
But economists still urge caution.
"There's no doubt the UAE is in a better place than it was in 2009 but they are not out of the danger zone," said Said Hirsh, an economist at Capital Economics.
While the country's banking and trade linkages to the troubled euro zone are limited, other sources of risk remain.
"The problem for the UAE is that they have strong ties to emerging markets, which are themselves exposed to the crisis," said Mr Hirsh.
"If that leads to a drop in oil demand, that could start to affect Government finances."
Even if that happens, however, the UAE has a backstop leaders in the euro zone can only dream of, he added, in the form of an estimated $600bn of foreign assets held by sovereign wealth funds.
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