“High-risk situation” … Dubai’s economy is heading for “deflation”!

0
56


“Standard & Poor’s Global” warned that the Dubai economy is heading towards deflation by 11 percent this year, while reducing the credit rating of two real estate companies among the major companies in the emirate to a high-risk situation.

S&P said that Dubai, the center of trade and tourism in the Middle East, was severely affected by measures to contain the Corona virus and is heading towards an economic downturn almost four times more than during the global financial crisis in 2009.
“We now expect Dubai’s GDP to shrink by about 11 percent in 2020, which exacerbates the economic slowdown that started in 2015,” Standard analysts wrote in a note dated July 9, adding that the emirate’s fiscal deficit is expected to balloon to around four percent of output. Gross domestic product this year.

Growth is expected to rebound to about five percent next year, but real GDP growth will then slow to two percent until 2023, which will account for half of the average recorded over the past ten years.
Standard & Poor’s downgraded Emaar Properties, the UAE’s largest real estate company that built the Burj Khalifa Dubai’s tallest tower in the world, to BB +, which is a highly risky rating from BBB-.
It expects Emaar’s profits to drop by 30 to 40 percent in 2020, and total revenue to fall between 15-20 percent, while the expected recovery in the coming year is expected to be only partly.
Standard also downgraded the Dubai International Financial Center for Investments, a unit of the company that runs the Dubai International Financial Center and is a free zone, to (BB +) from (BBB-) as well.
“We expect the Dubai budget to deteriorate, which reduces its ability to provide exceptional financial support to its associated entities,” Standard & Poor’s analysts said.

LEAVE A REPLY

Please enter your comment!
Please enter your name here