What's wrong with Dubai's economy

No more tourists: Dubai is threatened with an economic crash

When the emirate of Dubai threatened to run out of money in 2009 as a result of the financial crisis, its big brother stepped in, so to speak: the emirate of Abu Dhabi took over part of the expenses. In return, among other things, the name of the tallest building in the world had to be changed. “Burj Dubai” became “Burj Khalifa” - named after the ruler of Abu Dhabi Chalifa bin Zayid Al Nahyan. However, the money was well invested. Because Dubai developed splendidly in the following years and was able to attract more and more tourists. The emirate was seen as a prime example of how the Gulf States can succeed in building an economy independent of oil. But the corona virus could now destroy the building work of the last few years and decades. Because Dubai planned with twenty million regular tourists this year. The world exhibition in autumn should attract another three million visitors.

The United Arab Emirates are suffering from the low oil price

The Emirates airline also uses the emirate's airport as a hub to transport millions of passengers annually. But all plans vanished into thin air when the international flow of tourists came to a standstill as a result of the corona virus. The beaches of Dubai have now been cordoned off, the gigantic shopping malls are closed, hotels are no longer allowed to accept guests and Emirates Airlines is now temporarily ceasing operations. This alone is threatening the small emirate with huge revenue shortfalls. The emir of Abu Dhabi should also not be able to step in generously this time. Because the drop in the price of oil in recent weeks has also massively reduced its income. The situation is made worse by some peculiarities of Dubai's economy apart from tourism. Numerous real estate companies are located there that have invested in new projects throughout the Arab world. Here, too, the coronavirus is now leading to significant revenue shortfalls.

The world exhibition also threatens to be canceled

In addition, the actual construction work is usually carried out by guest workers from India or other Asian countries. Most of them had to leave the country in the course of the Corona crisis. But with that, another part of the country's economy collapses. Whether and how Dubai will survive this crisis will primarily depend on how long it lasts. For example, most experts are currently assuming that the world exhibition will have to be canceled or at least postponed in autumn. This would represent another major blow to the emirate's economy. Conversely, of course, the following also applies: Should the Expo take place, it could become a kind of symbol for a return to normality. Until then, however, state aid is needed: First of all, the United Arab Emirates have now launched a stimulus package worth 34 billion dollars.

Via: Handelsblatt