UAE’s asset price recovery is fundamentally sound | GulfNews.com:
"Abu Dhabi’s fiscal strength, improved liquidity in the banking system, relatively low leverage in the corporate sector and considerable progress in deleveraging of Dubai’s government related entities make the asset price surge in recent months more realistic according to economists.
“While we have for some time been highlighting our concerns regarding the sustainability of asset price inflation, we consider that Dubai today is much more resilient to such shocks than it was at the height of the previous cycle in mid-2008, for three main reasons,” said Farouk Soussa, Chief Middle East Economist of Citigroup.
In contrast to the previous asset price boom of mid-2008, Soussa said the banking sector liquidity is less vulnerable to exogenous shocks and is likely to remain supportive of local asset markets. In addition, in recent years Dubai’s economy made considerable progress on deleveraging and smoothing debt maturities. Refinancing risk among some of Dubai’s Government Related Entities (GREs) has been significantly reduced."
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