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May 27, 2020

Business confidence will improve: Dubai Chamber

National

 
May 27, 2020

DUBAI: A staggering 70% of businesses in Dubai expect to close their doors within the next six months as the coronavirus pandemic and global lockdowns ravage demand, a survey by the Dubai Chamber of Commerce reveals.

The Chamber surveyed 1,228 CEOs across a range of sectors between April 16 and April 22, during the emirate’s strictest lockdown period. Nearly three-quarters of those surveyed were small businesses with fewer than 20 employees. Of the respondents, more than two-thirds saw a moderate-to-high risk of going out of business in the coming six months: 27% said they expected to lose their businesses within the next month, and 43% expect to go out of business within six.

Dubai, which has one of the most diversified and non-oil dependent economies in the Gulf, relies on sectors like hospitality, tourism, entertainment, logistics, property and retail. Its hotels and restaurants are internationally acclaimed, but nearly half the restaurants and hotels surveyed by the organization expected to go out of business in the next month alone. Some 74% of travel and tourism companies said they expected to close in that time, and 30% of companies in transport, storage and communications expect the same fate.

“Full and partial city-lockdown measures are bringing demand in key markets to a standstill ... The double-shock impact is pushing economic activity down to levels not seen even during the financial crisis,” the Dubai Chamber wrote in its report released Thursday, entitled “Impact of Covid-19 on Dubai Business Community.”

The Dubai Chamber report notes that in March, “banks seem to have increased lending to SMEs which saw a 5.3% y-o-y growth, to reach a value of AED93.4 billion ... This improvement was mainly due to the government stimulus package announced in March.” “Dubai Government continues to monitor and offer support where necessary to help all of Dubai’s business community during this time,” a Dubai Chamber spokesman said in the hours after the survey’s release.

Economy already slowing pre-Covid: The coronavirus crisis follows a number of years of declining revenues for some of the emirate’s most important sectors, primarily real estate and hospitality. Residential property prices had already fallen 30% from their 2014 peak amid oversupply and weakening demand, and revenue per available hotel room was down more than 25% since 2015.

Last year Dubai’s economy grew at just 1.94%, its slowest pace since the dark days of its near economic collapse in 2009. That crisis, more than ten years ago, was sparked by a property crunch that forced Dubai to seek a $20 billion bailout from its wealthier and more conservative neighbor, UAE capital Abu Dhabi.

But the global pandemic will likely exact a toll on Dubai far greater than the downturn of a decade ago. The Chamber’s report warned: “The impact of COVID-19 crisis on the world economy during 2020 is projected to be greater than the 2008-09 financial crisis.”

When contacted, many people concerned told The News the pandemic had hit businesses hard across the globe. They were, however, confident that the situation will improve over time in Dubai as it had seen and survived many a crisis. Dubai had proved its relisilience in past, they added.