• Airlines need billions
• Less income and high debt in Dubai
According to estimates by the British consultancy Capital Economics, “Dubai is the most vulnerable economy in the Middle East and North Africa for economic damage from such lockdown measures.” Even before the corona pandemic, the emirate was struggling with declining revenues in its two main sectors: tourism and real estate.
So you are no longer dependent on oil but on tourism. The black gold should not be a better alternative for Dubai due to the oil price crash. “We believe that Dubai’s economy could shrink by at least five to six percent this year if these measures continue into the summer,” writes Capital Economics.
Where is Dubai heading to?
Since the beginning of March 2020, all schools, universities, shopping centers and entertainment facilities in Dubai have been closed indefinitely. Foreigners have not been allowed to enter the country since March 19. In addition, a 24-hour curfew has been in effect in Dubai since April 5, 2020.
These measures have enormous and unpredictable consequences for the economy. In contrast to Abu Dhabi, Dubai is suffering heavily from the corona pandemic, as the central sectors of aviation, tourism and trade are disproportionately affected. Abu-Dhabi can handle the crisis better thanks to the oil reserves, despite lower revenues.
Dubai’s Emirates airline has discontinued passenger traffic. Experts from the International Air Transport Association (IATA) estimate that the potential loss of sales that the Gulf region could face is up to $ 7.2 billion. To save the airlines Emirates and Etihad, at least $ 200 billion is needed globally, according to IATA.
Dubai expected around 20 million travelers in 2020. In addition, another three million tourists should come through the World Expo, which should start on October 20. This income is now breaking Dubai away.
No oil, but a lot of debt
Dubai’s economy was already weakening before the current crisis. In January 2020, the largest drop in jobs since the 2009 financial crisis was recorded. At that time, the Emirate’s central bank and the National Bank of Abu Dhabi each provided $ 10 billion in emergency loans. Dubai had to extend this in full in 2019. Dubai’s debt is now $ 135 billion. This corresponds to around 125 percent of gross domestic product (GDP). According to Capital Economics, approximately half of these liabilities will mature before 2024.
Felix Spies / editorship Forex-news.com.net
Image sources: MQ Naufal / Shutterstock.com