What are the agency’s expectations for Dubai’s conditions?
Dubai’s economy has contracted sharply by about 11% this year, partly due to the emirate’s economic focus on travel and tourism.
When will Dubai’s economic conditions improve?
Conditions will not be the same as they were before 2023.
The “Standard & Poor’s” credit rating agency said that the high debt burdens in the Emirate of Dubai will worsen, amid a macroeconomic shock related to the Corona epidemic.
In a report published on Saturday, the agency maintained its previous expectations that Dubai’s economy would contract sharply by about 11% this year, and partly attributed this to the emirate’s economic focus on travel and tourism, which are two of the industries most affected by Corona.
The tourism sector, which represents an important economic tributary to the emirate, was dealt a major blow due to the tight restrictions that Dubai had taken on the entry of foreigners, before it resumed receiving tourists on July 7, amid a weak turnout, due to health concerns.
The agency expects Dubai’s total general government debt to reach 77% relative to GDP in 2020, equivalent to 290 billion dirhams ($ 79 billion), compared to 61% in 2019.
The reason for the increase in the debt burden ratio is partly due to the sharp decline in GDP, due to the repercussions of Corona, according to the agency.
The agency said that the broader assessment of the public sector, including the debt of government-related entities, indicates a debt burden of nearly 148% of GDP.
She said, “In the event of financial hardship, we expect Dubai to receive more financial support from the Emirate of Abu Dhabi,” adding, “Dubai’s economy will recover to 2019 levels by 2023.”
And in early June, the emirate announced that its economy contracted by 3.5% on an annual basis during the first quarter of this year, under the pressure of the epidemic.
In late August, Reuters said that the total direct debt of the Dubai government exceeded $ 33 billion by the end of June, and includes debts owed to the Abu Dhabi government and the UAE Central Bank.
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