Economists are scaling back their estimates for economic growth in the United Arab Emirates this year amid fears that Dubai World's debt problems could stymie the flow of much needed credit and weigh on fragile investor confidence.
HSBC Middle East Ltd. has lowered its 2010 gross domestic product forecast for the Middle East's second-largest economy to 2% from 4.1%, while Standard Chartered Bank has slashed its growth estimate to 3% from 4.5%.
"Our view is that the events at Dubai World will have an impact on the U.A.E.'s growth as they influence confidence and will lead to both lower economic sentiment and credit growth for 2010," said Marios Maratheftis, an economist at Standard Chartered Bank. "Without the Dubai World events, growth could have been at 4.5% for 2010."
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