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American writer Mark Twain knew a thing or two about misleading stories. Responding to speculation about his health in 1897, a dry letter from Twain to the New York Journal stated that not only was a report of his death an exaggeration, “the report of my poverty is harder to deal with”.
Although no one is reporting the death of Gulf economies, a certain amount of exaggeration has crept in, fuelled by the fallout from the Iran war. Speculation that global cities such as Dubai and Abu Dhabi have somehow lost their lustre for investors abounds in some quarters. The facts, however, simply don’t support such conclusions.
Today, for example, a Dh1 billion ($272.2 million) support package for Dubai’s business sector will take effect, serving as a stimulus for companies over the next three to six months. Approved on Monday in a meeting of Dubai's Executive Council, the emirate’s ability to mobilise such a sum so quickly highlights the UAE’s determination to take the initiative in trying circumstances.
Measures like these depend upon solid fundamentals and robust institutions that can endure in uncertain times. For the past month, UAE economic and financial bodies have risen to the challenge, something that has not gone unnoticed. In a recent interview with The National, Henrik Raber, head of global banking at Standard Chartered in Dubai, said there had been “no real impact to date” from the conflict on financial institutions in the UAE. Similarly, S&P Global Ratings earlier this month affirmed the Emirates’ “AA/A-1+” rating and said its outlook remains stable.
These positive outcomes are not the product of luck or circumstance. They are the result of decades of diversification and planning. The UAE’s position as the Arab world’s second-largest economy – and its most diversified – lies in the fact that it has used its natural resources to build a comprehensive collection of income streams.
From sovereign wealth funds with global reach, such as Mubadala and the Abu Dhabi Investment Authority, to financial services hubs like the Dubai International Financial Centre and ADGM, the UAE has built a formidable and varied economic portfolio that includes ports, airlines, property and manufacturing.
Any responsible assessment of the current situation must acknowledge that regional and global economies are being affected by the return of war to the Arabian Gulf. Tourism, hospitality and aviation are just some of the sectors that are having to adapt in a number of countries. This can have a real effect on people’s livelihoods that must not be overlooked.
However, as the short-term effects of this war play out, there is no sign of medium or long-term damage being done to the UAE’s economy. Twain was frustrated by hollow reports of his alleged poverty, but he had the last laugh, leaving behind a considerable estate in 1910. Similarly, the UAE can expect to prove the doubters wrong.
