Business | Economy
Businesses urged to sift reality from perception
Business leaders have been urged to separate reality from the perception of the impact of economic crisis in the country.
- Staff Report
- Published: 00:02 November 27, 2008
Dubai: Business leaders have been urged to separate reality from the perception of the impact of economic crisis in the country.
Such sifting of reality would lead them to realise that Gulf economies are well positioned to take advantage of opportunities that will emerge when the economic cycle turns, said David Eldon, the Chairman of the Dubai International Financial Centre Authority (DIFC Authority).
He was delivering the opening address at the DIFC Conference, the third business event that formed part of DIFC Week, the DIFC's prestigious annual series of business conferences.
"Perceptions do not always equate to reality. Indeed if you take time to look closely, you will realise that the economies of the Gulf are by and large sound. And therefore well positioned for when the cycle moves upwards again," Eldon said.
However, he pointed out that any hopes of economic immunity and decoupling are "consigned to the fantasy file".
"All economies," he said, "are being affected by the global downturn, including Dubai".
Eldon said that Dubai has underlying strengths that remain intact despite the current economic environment, which he identified as an excellent infrastructure, a well regulated financial sector, an inherent openness to people, companies and capital from elsewhere and solid macroeconomic fundamentals.
He asserted that the perception in the western media that Dubai lacks the "financial muscle to cover its debt" is misinformed.
"The reality is that Dubai is not built just on credit. Dubai's growth in the past has been largely equity-financed rather than debt-financed," he said.
Eldon stressed that it is important to distinguish sovereign debt from corporate debt.
"The reality is that Dubai's debt is also very different from the indebtedness seen in markets like the United States. Debt there has gone to finance deficit spending and increased consumption. Debt here has been largely channelled into financing infrastructure and public utilities - investments that will be self re-paying, investments that increase productive capacity and enhance productivity growth," he pointed out.
Another big reality in the global economy is that capital flows will increasingly be channelled directly between emerging markets, Eldon said. "Indeed, the perception of some is that the current economic turmoil could accelerate the shift from West to East and from West to Middle East. The reality is they may be right. Only time will tell," he said.
The one-day DIFC Conference titled The Inside Track on Dubai was held to highlight the "upside of the downside" of doing business in the UAE and was divided into commercial and legal/regulatory sessions that included panel and teaching discussions.
Furthermore, it featured exhibitions by service providers from DIFC and Dubai's broader business community.
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