DUBAI, United Arab Emirates — Dubai, the glittering commercial hub of the Gulf, is facing the risk of a debt crisis reminiscent of the 2009 crash that wiped out thousands of jobs and nearly half the value of the emirate’s stock market, economists are warning.
Only this time, declining business growth over recent years is being compounded by the double whammy of crushed oil prices and global lockdowns brought on by the coronavirus pandemic, cases of which have surpassed 8,200 in the United Arab Emirates.
“Dubai is the most vulnerable of the economies in the Middle East and North Africa to the economic damage from such (lockdown) measures,” U.K.-based consultancy firm Capital Economics wrote in a report this week. “We think that Dubai’s economy could contract by at least 5-6% this year if these measures last into the summer.”
Lockdown measures in the emirate, which is home to the world’s tallest building and largest mall, have seen all but essential businesses close. This “will cause Dubai’s economy to contract sharply, exacerbating overcapacity in key sectors and making it more difficult for the Emirate’s government-related entities (GREs) to service their large debts,” the firm wrote.