Dubai at Risk as Coronavirus Poses Shock to U.A.E. Economy, Says Moody’s
Dubai at Risk as Coronavirus Poses Shock to U.A.E. Economy, Says Moody’s
(Bloomberg) --
Dubai’s reliance on real estate, transportation and tourism makes the Middle East business hub the most exposed to the impact of coronavirus in the United Arab Emirates, according to Moody’s Investors Service.
“The coronavirus outbreak and the pandemic’s indirect impact on global growth and trade pose a significant shock to economic growth in the United Arab Emirates,” Moody’s said in a report.
In the U.A.E., “the negative growth and fiscal implications are most acute in Dubai, while it faces the greater risk of its government-related entities requiring financial support as a result of the deterioration in economic conditions,” it said.
Dubai locked down the city for about a month to halt the spread of the virus. Its flagship Emirates airline has grounded passenger flights and the Expo 2020 exhibition scheduled to start in October was delayed by a year. Dubai eased movement restrictions last week.
Moody’s also said:
- “While stimulus packages will help to soften the blow to the UAE’s economy, the majority of the support has been provided in the form of monetary stimulus rather than fiscal stimulus, which means that the impact will depend on banks fully utilising the additional liquidity that the central bank has provided.”
- “Sectors that are likely to be most affected by the pandemic account for over half of the U.A.E.’s total GDP (and just under half of the non-oil GDP) and an even greater share of Dubai’s GDP.”
- “Abu Dhabi’s GRE exposure is primarily concentrated in the hydrocarbon sectors, which face challenges from lower oil prices but have strong starting financial positions.”
- “Sharjah’s GRE exposure is dominated by utilities which are broadly insulated from the impact. However, contingent liability risks for all emirates will increase the longer the impact of the pandemic endures.”
- NOTE: Dubai, Abu Dhabi and Sharjah are among seven emirates that make up the U.A.E.
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