Gulf assets: De-globalization spells change for Dubai
The Covid-19 crisis will accelerate monetization in the Gulf and see Abu Dhabi companies take equity stakes in the emirate.
Places such as the DIFC have lifted their curfew, but its a long path to financial stability
Life is returning to the Gulf’s foremost party destination. Dubai’s glitzy hotels, many of which were repurposed as isolation centres at the height of the Covid-19 outbreak are reopening. Revellers are returning to Barasti beach club, while the Dubai International Financial Centre (DIFC), the emirate’s financial heart, has lifted its curfew.
The end of June also saw Dubai World make its final repayment to creditors after the economic collapse in 2009, marking the end of a $23.5 billion debt restructuring that forced the emirate to take out billions of dollars in emergency loans to protect its economy and stave off the collapse of Dubai World’s real estate arm.
But economic data shows there is little cause for celebration. While first-quarter GDP data shows Dubai’s economy shrank by 3.5% year on year, this only reflects one month of lockdown, and many indicators suggest that the outlook for the second quarter is much worse.