The ‘City of Gold’, which glistens with luxuries, has been beguiling tourists to believe in what the stats have put a red sign on. Dubai appears to be one of the wealthiest cities across globe, but it has been moving with a sagging economy in recent years. The gold shine of the Emirati city began to fade further in 2020, as the COVID-19 pandemic put a mask on everyone and everything.
Dubai economy this year is falling lower into a crisis, where the sectors it stands on are suffering from deep cracks. From tourism to real estate and the stock market, the economic pillars have witnessed some serious blows.
On June 21, 2020, the city’s benchmark stock index suffered a drop, more than any other Gulf nation. Days before, the rating agency Moody’s Investors Service cut the outlook for eight of the United Arab Emirates’ biggest banks. The ratings of these banks were changed from stable to negative, reflecting “the potential material weakening in their stand along credit profiles”.
The eight banks included the Dubai Islamic Bank, Emirates NBD Bank, Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank, HSBC Bank Middle East, Mashreq Bank, the National Bank of Ras al-Khaimah and National Bank of Fujairah.
While the operating environment was already challenging, the Dubai Financial Market’s General Index also lost as much as 1.3 per cent following a reduction in the banks’ long-term ratings by Moody’s. The rating had an impact on Dubai’s stocks, as Emirates NBD and Dubai Islamic Bank weighed the gauge down majorly.
According to S&P Global Ratings, Dubai economy is expected to suffer a “significant shock” this year, amidst the coronavirus outbreak that coincided with a crucial decline in the oil prices. On July 9, S&P confirmed that the Gross Domestic Product of the Emirati city will possibly shrink about 11 per cent this year.
While the Dubai economy was already flagging, the COVID-19 pandemic has worsened the situation. It was analyzed that the city is facing an economic contraction, which is deeper than the decline during the financial crisis of 2009. Like every other flaw of the United Arab Emirates, Sheikh leaders of the monarchy have been putting the PR band aids on the economic wounds. However, considering the current scenario, the coming years would still be hurting the country bad.
