According to a latest report, the UAE is expected to grow just by 3 percent from its last year’s performance of six percent. Huge slump in growth of sectors including construction, real estate, IT, hospitality and service industry since last September have factored in for the country to downgrade its projections several times in last couple of months. Similarly, Dubai, one of the emirates of the UAE has also brought down its growth as 2.5 percent from the 2008 projections of 11 percent year on year for the next 7 years.
The chief economist of the Dubai Government, Raed Safadi said that the country was not immune to economic downturn as generally thought. The double whammy effect was particularly felt owing to the world economic crisis coupled with gigantic drop in oil prices. It must be recalled, Dubai, one of the fastest growing cities in the world had recorded a growth of 8 percent in 2008.
Although Safadi has later stated the focus would be to retain the man power, but according to several sources many companies are still sending employees regularly with extended long leaves. Industry observers said the firms were not laying off them because they expect a turnaround in business, and in such a scenario it would be hard to scoop out required talent. Notwithstanding, if the status of the economic growth remains the same or dips further, the extended leaves perhaps become layoffs.
Nevertheless, Safadi said 2000 visas were issued per day in January 2009 against 1500 cancellations during the same period. He further assured there was no need to panic as many investors were lined up for licenses to do business with them. He further added that country was prepared for the economic crisis by adding on current account surplus for the last six years when the economy grew at a faster pace.
According to IMF projections, the UAE economy would not be without a silver lining since there would be a considerable drop in inflation from 10.6 percent in 2008 to the realm of 6 percent this year. Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department further arrayed data on the current monetary situation of the UAE that from a $40bn surplus in 2008 the country is likely to end up with a deficit of $15-16bn in 2009. However, the estimated 3 percent growth is at par with developing countries while developed countries will contract by 2 percent this year as per the latest data by the IMF.
Toboc Trade News