It is 2 days since global economic meltdown has started from USA. AIG is still on the verge and looking for saviours. They have daunting task of arranging $80bn in one day to save from filing bankruptcy. Lehman Brothers have been banned from operating worldwide; India has banned them from trading and any forex remittance, in UAE both of their licenses have been suspended; UK has put the company under administrators PWC.
The talk in UAE is, are the local banks safe as they project (rather don’t declare) or they too have huge exposures and things are going to tough here too? It seems nothing is green as it appears, there are lots of troubles in store waiting to come out.
Economic troubles can be gauged from high inflation, cash flow issues in the market, slowing of real estate projects. Incidently today’s reports indicate that UAE tops the list of projects cancelled / on hold with 88 of them worth about $40bn. Saudi Arabia, Qatar and Kuwait contribute to balance 45% of cancelled / on hold projects in the region. Every other day we are coming across some property developer who has misappropriated the funds and caused heavy losses to investors. Industrial investment has slowed down a lot and new projects are difficult to find. Industrial areas like Dubai Industrial City (even after making claims that all land is leased) have hardly any project completed in last 2years. I my view this all together indicates troubled times for oil rich economies in this region.