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Federal support for Dubai to continue - expert

Abu Dhabi will continue to support Dubai during the global financial crisis, an economic expert has predicted.

Robin Bew, chief economist for the Economist Intelligence Unit (EIU) in London, the global business intelligence group, said Abu Dhabi would put pressure on Dubai to follow a more sustainable development path, following the severe downturn in the emirate’s property market.
“We’ve had a few speeches and comments which seem to make it clear that ultimately Abu Dhabi will stand behind bits of Dubai and clearly there’s already been some funds extended,” he said.

In February the UAE Central Bank bought up the first $10bn tranche of a $20bn bond issue launched by Dubai.

A number of high profile construction firms and consultants working on Dubai’s biggest projects have admitted they are owed millions of dirhams by developers in the emirate, many of them government owned.

“What we will see is a desire to make sure the growth we are getting in this region is sustainable and there is final demand for investment that has been put in place. I think there will be a great desire on the part of Abu Dhabi to make sure that the development path that gets put in place tries to avoid some of those [Dubai’s] excesses,” he added.

Bew predicted the world economy to stabilse by the end of the year before recovering slowly and posting GDP growth of 1.9 percent in 2010.

He remained bearish on oil and forecast an average price of $50 this year, $52 in 2010 and $55 in 2011.

Before joining the EIU in 1995, Bew worked as an economist at the Treasury department for the British government, forecasting trade performance and analysing fiscal policy.

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