By Elizabeth Broomhall www.arabianbusiness.com
The mood is grim at the Address Hotel in Downtown Dubai. Overlooking the iconic Burj Khalifa, the hotel has become a vantage point for viewing the spectacular dancing fountain that comes to life several times a day.
But as we wait for the arrival of two of the UAE’s most senior government leaders, smiles are hard to come by and the music from the fountains is being drowned out by talk of a second global recession.
Gold has just slumped another $60, silver has plunged again to record losses of 40 percent in one week alone. Britain’s top 100 companies have lost $117bn in value the previous week, while the International Labour Organisation has just warned that G20 countries could end up losing 40 million jobs by 2012. Somehow, news of the eurozone’s plan for $2.6 trillion bailout for debt ridden countries, being flashed in the television screens at the hotel’s reception, goes unnoticed.
Everyone wants to know only one thing: is the crisis going to spread to the region? It is Sheikh Ahmed Bin Saeed Al Maktoum, chairman of state-backed conglomerate Dubai World and Emirates Airline, who appears first. Amidst the chaos, he is (as always) a figure of calm. Is he worried about a slowdown in the local economy and the event that Abu Dhabi could, as experts have warned, be affected?
“I’m not worried about Abu Dhabi at all.”
But does he not fear a global double dip recession? “Worldwide, I don’t know if we are headed for a double dip recession, but I am not worried here, in this region.”
Should he be? Growth forecasts around the world are being revised, in some cases completely re-written. In the UK, the International Monetary Fund is predicting just 1.1 percent growth for 2011, compared to its two percent forecast at the start of the year. Four of the G20 countries — Italy, France, South Africa and the US — are now expected to grow at less than one percent this year, while global growth is now set for just four percent in the best case scenario.
“I’m not really [concerned]. Sometimes the whole world is together whatever the effect could affect here but I think things are improving,” says Sheikh Ahmed. He points to Nakheel’s announcement last week of a new project on the Palm Jumeirah, and hints of big orders to come from his own company Emirates Airline at the Dubai Airshow in November.
“I would say it’s more positive that we might sign something,” he says.
As chairman of Dubai’s Supreme Fiscal Committee, Sheikh Ahmed knows the detailed picture better than most. And the positive outlook is shared by many UAE ministers, who are sticking by their own positive outlooks. UAE Minister of Economy, Sultan Bin Saeed Al Mansouri, tells Arabian Business that the country’s economic growth for 2011 is on track and will likely exceed expectations. “According to the data, oil prices, trade and industry figures… there will be a positive economic growth for this year. My expectation is that the growth will be more than three to 3.5 percent this year,” he says.
But not everyone agrees, with most analysts suggesting that just like 2008, the crisis in the West is fast heading East.
“Eurozone debt crisis will have ramifications for the GCC directly both from a trade and investment perspective, especially in a worst case scenario that would see contagion mushroom from Europe and across the globe,” says Domluke Da Silva, executive committee member and chair-advocacy for the CFA Emirates Society. More info