Impact of Economic recession on UAE

Impact of Economic recession on UAE

As Bloomberg notes:

Dubai suffered the world’s steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG.

As the CBC notes, things went South quickly in Dubai: Hundreds of billions of dollars worth of building projects were delayed or cancelled. Thousands of jobs disappeared. Dubai, playground of the über-extravagant, suddenly found itself facing the very real possibility that its biggest state-owned company, Dubai World, could go into bankruptcy. It warned it was having trouble making debt payments on $59 billion US — money borrowed to pay for all the excess.

Global Impact

The CBC also notes that Dubai World has holdings worldwide:

Dubai World is Dubai’s main holding and investment enterprise, but its holdings range far beyond the Persian Gulf area … Another Dubai World holding — DP World — operates Centerm, a container terminal in Vancouver’s inner harbour. DP World acquired the terminal when it bought the marine terminal assets of P&O Ports in 2006, and plans to spend $140 million to expand it. That purchase also gave it ownership of many key U.S. ports — something that raised national security concerns in the U.S. Some American legislators didn’t like the idea that U.S. ports would be controlled by Middle Eastern state-owned enterprises. DP World subsequently sold its U.S. port assets.

In Britain, another Dubai World subsidiary, Leisurecorp, bought the Turnberry Resort in Scotland in 2008 — home to the 2009 British Open — for more than 50 million pounds.

In the U.S., Dubai World’s investment arm, Istithmar World, bought the luxury retailer Barneys New York in 2007 for almost $1 billion US. There were reports earlier this year it was trying to unload the retailer as the luxury market unwound and Istithmar racked up big losses from the global financial meltdown, but Dubai World’s chair denied it.

In addition, Bloomberg notes that India might be effected by Dubai’s economic problems: About 4.5 million Indians live and work in the Gulf region and remit more than $10 billion annually, according to government data. The turmoil may affect remittances, said Thomas Issac, finance minister of the southern state of Kerala, which accounted for about a quarter India’s migrant labor in 2005…

The biggest creditors of the United Arab Emirates, of which Dubai is a part:

Creditors Of United Arab Emirates (By Origin via Credit Suisse citing Bank for International Settlements):

UnitedKingdom:$50.2billion
France:$11.3billion
Germany:$10.6billion
UnitedStates:$10.6billion
Japan:$9.0billion
Switzerland:$4.6billion
Netherlands: $ 4.5 billion

Creditors Of United Arab Emirates (By Entity via Credit Suisse, citing Emirates Bank Association):

 HSBCBankMiddleEastLimited:$17.0billion
StandardCharteredBank:$7.8billion
BarlaysBankPlc:$3.6billion
ABN-Amro(RBS):$2.1billion
ArabBankPlc:$2.1billion
Citibank:$1.9billion
BankofBaroda:$1.8billion
BankSaderatIran:$1.7billion
BNPParabas:$1.7billion
Lloyds: $ 1.6 billion