Dubai: World Bank President Robert Zoellick on Wednesday reiterated his confidence in Dubai's economy, saying Dubai World's debt issue will be addressed.
His comments came just before Emaar Properties announced it was calling off a proposed merger with Dubai Holding's real estate entities, that would have created a $52.8 billion property giant.
An Emaar board announcement said the decision was based on careful feasibility studies conducted by a group of leading economists and international expert houses under the supervision of officials from both sides.
The board said the study's results indicate that the merger plan that was discussed proved economically unfeasible at this time.
The announcement could lift the company's share price, which plummeted 9.86 per cent to Dh2.56, as UAE markets continued their decline for the third straight day yesterday on a selling spree.
Agreement
The financial disturbance over Dubai "can be contained" as the affected companies and their creditors are likely to reach a standstill agreement, Zoellick said in statements carried by Kyodo News and other Japanese media.
"Officials have to be prepared for different waves of the [global] crisis," Zoellick said. In 2010, "we have to anticipate potential dangers because we are not through this crisis", the head of the international lending institution added.
Low-interest rate policies adopted by monetary authorities after the start of the global financial crisis drove people to put their money in real estate, stock markets or other assets, according to Zoellick.
Standard Chartered, commenting on its exposure to the restructuring companies in Dubai, said that any resultant loan impairments would not be material.
In a scheduled trading update, Standard Chartered said that the situation in the UAE remained in its early stages and was "fluid". It added: "Given the profile of our exposures in Dubai, we do not believe any impairment would be material."
Investment Bank EFG-Hermes has revised the UAE's economic growth, forecasting real GDP growth of 2.9 per cent in 2010, with real non-oil growth forecast at 2.7 per cent.
