UAE economy seen as worst GCC performer in 2010

Posted by: Red Snappa Friday, 30 July 2010 11:32 PM[UAE]

I don't actually think that money from Abu Dhabi will accelerate a bounce back in less time than it took Hong Kong to revive, five years was my minimum crystal ball result. Abu Dhabi is having to invest large amounts in its own domestic industries to maintain subsidised momentum, never mind the nation. Singapore is an infinitely more sophisticated environment with many more years of financial, legislative and corporate governance evolution beneath its belt. Also correct me if I'm wrong, but from a real estate perspective Marina Bay appears to have been a steady but unqualified success? I also accept from Peter Cooper that there is more to the Dubai than tourism and finance in that it was trade that drove the economy in the first place and back to basics is a good policy. Their may well be an oil spike in 2 to 3 years or even sooner which will swell the coffers but foreign companies come here to earn money and if it is dispensed honourably and on time for services rendered, they will do their due diligence in terms of either setting up or expanding an in country presence. Due diligence no longer involves an element of trust it has become intensely black and white, are my corporate interests fully protected under a complete spread of the law and are all opportunities created transparently for me equal in terms of my business and more importantly my life. That becomes difficult check list, because you will be told what you want to hear but there is a need for multiple opinions these days, for as each piece of the commercial jigsaw emerges from the box, confidence erodes. Revert to trade indeed but Iran has suddenly become a closed shop, the region's geo-political situation is as ever ticking away in the background and it's ticking louder by the day. Price of oil goes up certainly as result of rising background noise but insecurity sets in and population growth slows. Singapore is not oil dependent as its primary trading commodity and currently it sits in a far more serene environment. The money as you put it, has to be invested in establishing trust, buying in expertise but ensuring that the knowledge is passed on to trainees who actually have to go out and do the job before their management capacity is addressed. A new era of truly protective legislation for foreign investors. Your house and your office will get built, otherwise you are entitled to compensation according to a standard table at an average lost interest rate. Standard payment term tolerances are this etc, etc. Applicable across the board, state-owned companies and all. There is much work to do to encourage external investment in both commercial and economic growth across a spectrum of industrial diversification. A reasonable cost of doing business, borrowing money and living are vital components to the exercise for at the end of the day, as they say in footballing parlance you have to see the value to pursue the objective.

Posted by: Ex-Expat Friday, 30 July 2010 8:20 AM[UAE]

To Red Snappa: You say many wise things I can agree with. However, what makes you think that just money from AD will make Dubai bounce back 5 years faster then HK? You better check: 1. What do you do with money? The right things? 2. What people do you have to carry this bounce back? Are they motivated and ecucated? 3. Do you make fast chances in all areas to adjust to the new situation? And these are also the questions that Gareth has to ask and he might get very different feelings after his short tour through the region. Singapore is allready bouncing back with plus 10 percent growth. Why: Clear rules and regulations, level playing field for everybody, excellent infrastructure and banking system, well educated and hard working people. These are things you cannot match with money. And that SG has as well, without any oil. Amazing, isn't it?

Posted by: Peter Cooper Friday, 30 July 2010 8:04 AM[UAE]

Interesting reactions but typical of a mixture of 'no hope' and 'yes but not now' that you would expect to get at this stage in the business cycle. My money is still on another oil price spike within two or three years that really gets things moving again. Dubai has trade, not just tourism, and finance - this is where the real recovery will come from. But true that will be too late for those who came in the bubble years and got carried away. Business cycles are particularly violent in emerging markets but that can also be a good thing if you get the timing right!

Posted by: Gareth Allan @ Project IT Resource ME Thursday, 29 July 2010 8:12 PM[UAE] - UK

Having just returned from Doha and Dubai, I am intrigued by the predication of UAE low economic growth forecast for 2010 - 2011. I understand the strength of the GCC collect economies and the future ambition to develop a single currency. I feel that the surrounding region will help develop the UAE economy, which is often only operational centred in the UAE and conducts business across a greater Middle Eastern space. I feel that jobs, growth will all be generated by the regions strong growth in comparison to places like Europe and North America. Am I alone in this snap analysis or does nay one else have comments for or against. Gareth Allan Middle Eastern Consultant @ Project-IT resource

Posted by: Red Snappa Thursday, 29 July 2010 3:02 PM[UAE]

Peter my dear chap, you are absolutely correct, it took 10 years for Hong Kong to bounce back. However, would it not be reasonable to assume that it will therefore take the UAE at least 5 years based on Abu Dhabi's oil revenues to underwrite the return to prosperity of the other six emirates, all of whom have a tad of a debt problem. Abu Dhabi credit rating good aside from real estate unless the sector is funded by government contracts. The rest of the world does indeed have its economic issues still, many former powerhouse economies are not beyond the bounds of volatility as we speak, but does not the fall out from this status quo spill over somewhat to arrest the progress in the UAE. Abu Dhabi is going to have to spend rather a lot to reestablish the overall UAE as a safe property investment haven in any shorter time than Hong Kong. Tax freedom is of course the major incentive, what else have we got: great infrastructure in two emirates and attractively elevated bank interest rates for depositors. But weak overall regulation and transparency plus excessive living and commercial overheads where housing expense truly does need to equate to no more than 35 per cent of income, somebody bright in Abu Dhabi has seen the light on that score. Remember Hong Kong was the financial and commercial gateway to mainland China and that's what it is used for. Do we regard the UAE as the F & C gateway to monetary unionists Saudi Arabia, Qatar, Kuwait Bahrain I think not. We have a while to wait yet before we are in the ascendancy yet in terms of economic growth we are in positive territory. However, with more than a sniff of trouble at t'mill across the other side of the Persian, we're not allowed to say Arabian I guess, Gulf it is but fragility.