How far down will oil’s descent take the UAE economy? | The National:
"The UAE will be in recession next year. How can it be otherwise, when oil prices are cut in half and oil revenue makes up a third of the national GDP? You might hope that non-oil growth will compensate for the loss of oil revenue, but then how can that happen when most of the non-oil revenues are from trade with countries even more dependent on oil income? I’ve lived through two recessions here, so this will be my third.
This does not look like a rerun of events in 2009-10. Abu Dhabi prevented that happening by putting a brake on the housing boom late last year. True, Dubai is still busy putting a canal under Sheikh Zayed Road. But this is not like 2009, when hundreds of billions’ worth of projects went ahead simultaneously then stopped suddenly, leaving a pile of debts.
Sure, the debts are still there, albeit refinanced at much lower interest rates on longer tenures. A repeat of the Dubai World US$25 billion debt standstill is highly unlikely – the bankers have made sure of that. Dubai will be able to carry on building, although some projects will go slow and some actually stop for a period. Abu Dhabi will probably follow the same path with its pharaonic public works."
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