Business | Opinion
Proving to be a cut above the rest
My barber is a philosopher, foreign policy expert, stock market analyst and economist all rolled into one. While undertaking the task of making me look presentable, he shares his world view, ranging from the crisis in Myanmar due to the military junta's corruption, to Russia's tactics in South Ossetia, to the futility of India's moon mission when millions are starving to death.
- By Babu Das Augustine, Banking Editor
- Published: 00:08 October 25, 2008
My barber is a philosopher, foreign policy expert, stock market analyst and economist all rolled into one. While undertaking the task of making me look presentable, he shares his world view, ranging from the crisis in Myanmar due to the military junta's corruption, to Russia's tactics in South Ossetia, to the futility of India's moon mission when millions are starving to death.
Yesterday, attending to my hirsute features, he asked: "Sir, what is wrong with America these days?" As usual, I feigned ignorance of the subject.
Disregarding my subtle snub, he continued: "Can't it do something better, like creating jobs, rather than spending billions on bombing Iraq and Afghanistan?"
His razor was approaching my neck at that moment. I hesitated, as if not understanding the politics and economics behind his question. It was his monologue that proceeded.
Slowly applying a local twist to his analysis, he said: "I hear if the Americans are in trouble for long, eventually the whole world including the UAE will be in trouble, with many businesses and jobs vanishing."
Right at that moment I appreciated his stance towards the global economy and its potential local impact, not to mention my neck.
Two days earlier, I had been told by an eminent economist: "So far, regional economies and financial systems have been largely resilient to the international credit crisis. However, it will be imprudent to assume that the region will remain insulated." Those were the words of Mohsin Khan, Director of the International Monetary Fund's (IMF) Middle East and Central Asia Department.
The IMF has forecast the UAE's real GDP will ease from seven per cent growth in 2008 to six per cent in 2009. But this projection is based on an average oil price of $106 per barrel, and may have to be further revised downwards if oil prices continue to fall. At the time of writing, oil had slid below $70 a barrel.
Currently, the world over, the policy emphasis is on job-creation and boosting consumer spending through monetary and fiscal stimulus. The UAE has already guaranteed banking sector liabilities, including in the inter-bank market. In addition, the government has announced a 21 per cent increase in federal budget outlay, with a moratorium on state fees and taxes.
Lead
Judging by the number of projects announced by the private sector in recent weeks, maybe the UAE has taken a lead over its regional peers in recession-proofing its economy. During the recent Cityscape real estate show in Dubai, private and semi-sovereign entities announced Dh1 trillion worth of investments in real estate infrastructure.
My barber is very much aware of these developments, although not so versed in macro-policy settings.
Professor Paul Krugman, meanwhile, winner of this year's Nobel Prize for Economics, might be relieved to hear that this a country has done everything in his list of prescriptions to treat a slowdown. Neo-Keynesians might be thrilled to learn that all this will be possible in the UAE without provoking a fiscal deficit. The only potential side-effect will be the unintended capital inflows, searching for arbitrage and a safe haven. Apparently, avoiding recession won't even be a close shave.
Judging by the number of projects announced by the private sector in recent weeks, maybe the UAE has taken a lead over its regional peers in recession-proofing its economy.
Share this article
More from Business Opinion
More from Business
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
New law to protect investor rights
Dubai land department is studying legislation to protect property purchasers
-
Global Village
Revamped layout featuring four cultures to greet visitors this season
-
Cloud computing is here to stay
Managing security effectively is critical when sharing data over the internet
