Special Report: UAE - Emirates strengthen federal ties
The UAE economic model has come under unprecedented strain in recent months, with Dubai in particular suffering a severe reversal in fortunes.
The hyperbole that its ambitious development programme attracted over the years has given way to negative headlines.
It is not hard to see why. Research from Swiss investment bank UBS reveals that Dubai faces an 8 per cent population drop this year, with further declines likely in 2010. This exodus of expatriates reflects the tormented state of the emirate’s real estate, construction, retail and banking sectors, which have been caught out by the global economic downturn.
It also adds to the decline of these key economic areas, as lower demand propels further erosion of property values.
There is hope, however. The Central Bank of the UAE’s purchase of $10bn worth of Dubai bonds has reassured investors, even if the rapid pace of growth will have to be scaled back. The UAE will remain an integrated whole, and Abu Dhabi has signalled that it will not allow Dubai’s economy to collapse.
The federation’s success in forging a dynamic economy over the past four decades rested on a supportive financial climate, which has evaporated, and the authorities will have to forge a new way of doing things to build upon the achievements of the past.
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