When the global economy is in turmoil, Dubai has achieved yet another economic milestone that proves the emirate’s solid fundamentals.
On Tuesday, Dubai World made the final payment of $8.2 billion to creditors, completing a debt restructuring that had weighed on the emirate since the 2008 financial crisis, which forced the company to restructure $23.5 billion.
The more significant is that the debt has been paid two years ahead of schedule; unquestionably remarkable at a time when the global economy has already plunged into steep recession because of the coronavirus pandemic.
Dubai not only remained resilient during previous earth-shattering events but saw periods of unprecedented growth thereafter
Dubai World has repaid $18.9 billion to creditors since 2011. The final payment was due in September 2022. “The full repayment represents an important milestone for both Dubai World and for Dubai,” Dubai World Chairman Sheikh Ahmed Bin Saeed Al Maktoum commented on Tuesday.
He said the company will now focus on streamlining and strengthening its efforts to deliver long-term value for all stakeholders.
The momentous announcement coincided with the release of the latest economic data the Dubai Statistics Centre. Due to the COVID-19 outbreak, which shut almost all sectors of the economy for a good part of the first quarter of 2020, Dubai’s GDP (gross domestic product) has recorded a meagre 3.5 percent dip, compared to the sharper declines registered by most world’s major economies.
The United States’ GDP, for example, fell nearly 5 percent in the same period. China saw its economy contract by 6.8 percent. France’ GDP’s decline rate in the first quarter touched the 6 percent mark.
The decline was expected as the main economic sectors were shuttered as the COVID-19 infection cases rose dramatically in the first quarter. Aviation, tourism and retail operations were completely halted due to the virus containment measures.
Road to recovery
However, economic activities have resumed and most containment measures eased up as the numbers of infection cases continue to decline and the rising hope of developing a vaccine.
Therefore, the emirate is poised for a period of economic recovery. The recovery understandably may not be instant- in line with most expertise opinions. But as Dubai has shown in the past decades, it will be stronger.
Since the 1980s, Dubai, the region’s business and trade hub, has naturally been impacted by different cycles of global economic turmoil and regional geopolitical crises- the Iran-Iraq war (1980-1988), the Iraqi invasion of Kuwait in 1990, the September 11 terrorist attacks on the US, and the 2008 the financial crisis.
But Dubai not only remained resilient during all those earth-shattering events but saw periods of unprecedented growth thereafter.
The coronavirus pandemic continues to represent an unprecedented challenge to all world economies. Yet again, those who bet against Dubai will lose. In the past 40 years, the emirate weathered far stronger storms and came out stronger every time.