Further job cuts in the UAE are expected as companies look to rein in costs amid fears a slowdown in Europe and the US could affect the Gulf state’s economy, analysts said.
Jobs in Abu Dhabi’s construction industry are likely to be the most affected as state-backed firms reassess their budgets, said Ayesha Sabavlava, UAE country economist at the London-based Economist Intelligence Unit.
“There have been a couple of job cuts….I think that it’s possible that there will be more going forward in 2012 because growth, especially in Abu Dhabi, where a lot of the hiring that has been going on has slowed down considerably,” she said.
“Part of the slowdown is because of what is going on in the west, particularly Europe and the US. With the UAE being right in the middle of trade flows between emerging markets and developed markets, this is obviously going to have an impact on the UAE.”
The UAE was dealt a blow by the global economic crisis in 2008, which saw property prices decline by around 60 percent as banks curtailed their lending and speculators left the market.
The Gulf state’s economy contracted 1.6 percent in 2009 while around half of the projects, the region’s busiest builder until late 2008, were cancelled in the wake of the crisis.
Abu Dhabi specifically has moved to rein in spending across its infrastructure projects, delaying the completion of branches of the Louvre and Guggenhem due to the “magnitude of work”.
The UAE capital earlier this year saw a spate of redundancies and job changes at some of its largest state-owned or support companies, following an emirate-wide review of costs.
Growth in the world’s third biggest oil exporter could slow to three percent next year amid Europe’s deepening debt crisis and weakness in the US economy, the Gulf state’s Central Bank Governor said in November.
“It is a source of concern for everybody in the world so it is a source of concern to us as well because Europe is a very important trade and business partner for the UAE and worsening conditions economic and financial will reflect on everybody,” Sultan Nasser al-Suweidi said.
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