February 15, 2010 by akhilendra
Dubai impact
The united Arab Emirate (UAE) has a total debt of $184 billion. Bank of America-Merrill Lynch estimated that, as per them, region faces a heavy redemption schedule until 2013. Dubai announced that it is seeking to suspend payments on debt of its state-owned Dubai world and property subsidiary Naksheel. The announcement came as a complete shocker as the event has potential to reduce the pace of global economy recovery. Bank of America-Merrill lynch stated that it would severely impact the Gulf’s region economic recovery. Dubai accounts for $ 88 billion and Abu Dhabi for $ 90 billion. Global stock market came under huge pressure after the revelation.
Investors are concerned about the exposure of the companies to this debt saga. Tremors were felt along Arabian Sea on Wednesday, when Dubai announced to delay the payments of the debt. Dubai has emerged as a global economical hub in last few years. Lot of super rich were interested in its Palm Island project, And there were lot of other super projects which helped it in gaining a lot of attention among global investors. Lot of foreign banks and real estate developers invested a lot in this growing market.
Indian banks have said that there exposure to the region was very limited and easily manageable. Similar reactions came from French, Italian and Chinese banks also. JP Morgan said that it was less concerned about global banks direct exposure to Dubai world and was not worried about Abu Dhabi, a major oil producer. Indian real estate developers have also participated in this upsurge. Most of the major developers have denied of any adverse affect of the turmoil in neighboring country. DLF, Emaar MGF, Unitech, Parsvnath developers have said that they have no exposure in Dubai where as Omaxe have said that it has an investment of 40 crore which it has asked for the refund.
Reserve bank of India’s Governor has said that it will study the extent of Dubai debt problem as well as its impact on Indian economy. There are many Indian companies which are involved in global market. But the extent of damage will vary from sector to sector and company to company. Though, after going through the deadlock of a recession, people are confident of tackling this also in comfortable way.
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