Strong spending to prop up economies

Dubai: The UAE and other GCC countries are poised to weather the economic downturn due to the governments' strong fiscal position and steadfast commitment to support continuing economic growth, the region's consumers and financial experts said.

The region, which remained unscathed for sometime, has just started to feel the impact of the crisis, with companies downsising and cutting jobs in recent months.

The impact is seen to continue and will be substantial, but the question of whether GCC markets may suffer from a technical recession this year is not the critical issue.

According to Dr. Yuwa Hedrick-Wong, Asia Pacific economic advisor for MasterCard Worldwide, the region's economies are grounded on a much more robust and sustainable foundation than ever before.

"The impact [is] felt in the region, particularly in the real estate sector. That's not surprising. But on the other hand, the flip side is that the fiscal position of governments is strong. And I think, in the coming months, the governments will continue to do what is deemed necessary to provide a solid floor to ensure that recession is shallow and short," Wong said during a press conference.

"In the short term, GCC governments have the financial wherewithal to provide the necessary fiscal stimulus to support continuing economic growth to mitigate the worst of the global impact, but more importantly, the investment made in recent years in infrastructure and capacity building will bear fruit in the coming years and decades."

Wong also assured that both the developed and emerging economies worldwide are already past the panic stage, the most dangerous phase of the financial crisis, and are now heading towards clearing the market, which precedes the recovery period.

Due to the current economic situation, consumer confidence in the UAE and in other GCC countries, has dropped. UAE consumers agree with Wong, saying that they remain generally optimistic that Dubai will soon be on its way to recovery.

"I am optimistic that Dubai will be able to handle the economic crisis. What is needed is that the government should assure the investors that the economy of Dubai is stable and strong, in order to restore their confidence," said Jay Sia, an expatriate engineer working in Dubai.

Rizwan Uk, an Indian expatriate, said consumers should remain positive about the UAE's economy, although cutting on spending is the call of the hour.

"We should be positive, but we need to change our spending patterns," he said.