Comprehensive crises facing UAE’s economy, amid expectations of the worst yet to come

The overall crises that the UAE economy that has been going for years are escalating amid expectations of the worst in light of the state’s involvement in wars and external interference that negatively affected the state.

The specialized reports confirm that the economic crisis in the UAE is exacerbating and escalating on a record basis, warning against reaching the point of the explosion, and among its evidence is that the number of employees and banks operating in the country has decreased.

The banking sector has had a lot of expansion, profitable activities and deals over many years in the Emirates, but this sector continues to decline.

A few days ago, a report of Reuters International revealed that Dubai Islamic Bank is preparing to dispense about half of the workforce in one of its linked banks, through a layoff plan, due to financial pressures.

This will be done by laying off about 500 employees of “Noor Bank”, which it recently acquired, as part of plans to reduce costs at both banks, the agency said.

A unit of the International Standard Chartered Bank cut more than 100 jobs in the retail activities sector in the UAE last August, at a time when official data show that the banking sector and many activities are exposed to many pressures.

The credit rating agency, Fitch, affirms that Emirati banks have not fully recovered from the real estate crisis that struck Dubai in 2010, stating that “bank loans in the second and third stage (which have been restructured) are already high, with an average of between 15 and 20% of the total Loans are likely to increase.”

In the meantime, the real estate market in the Emirates continues to decline after this sector was among the largest sectors attracting investors and international capital.

The real estate market in Dubai has been witnessing a steady contraction, since mid-2014, due to the lack of demand from foreign investors, and the overall market has fallen by at least a quarter, according to specialized reports.

Recently, CNBC Arabia quoted Hussein Damac, Chairman of Damac, one of the largest real estate companies in the Middle East, as saying that prices reached the bottom in 2019, and the offer in Dubai is what drove the real estate market to decline.

He added: The company “was expecting a supply glut, which appeared clearly in the company’s data in 2018, which prompted the company to launch one project in 2018 and 2019.”

He pointed out that DAMAC “reduced projects in 2018 and 2019 by 90%.”

And last summer, Savills Real Estate Consulting said that the prices of luxury residential properties in Dubai fell 1.9% in the first half of the year, due to excess supply.

Savills said that the prices of the luxury real estate market have decreased 19.8% over the past five years, to reach $600 per square foot, “due to the high levels of new construction stocks and the global economic uncertainty.”

Meanwhile, the losses of the aviation sector in the Emirates are prominent, as Dubai International Airport, which is the center of Emirates Airlines operations, has been transformed within a few years, from just an airstrip on the banks of the Arabian Gulf, to the most important air center in the Middle East and one of the ten best Airports in the world and the fastest growing.

Dubai Airport has attracted more than 115 airlines covering more than 135 destinations around the world, and its capacity is about 90 million passengers annually, and it has become one of the most airports in the world receiving international travelers.

However, Dubai Airport witnessed a decrease in passenger numbers during the past year, by 3.1% from the previous year, to record the first annual decline in travel traffic.

The Reuters news agency quoted airport CEO Paul Griffiths a few days ago as saying that the factors that led to the retreat include the temporary closure of the landing strip, the collapse of the Indian Jet Airways, and the prevention of Boeing 737 MAX planes from flying globally.

He added that the airport lost about 3.2 million potential passengers, as a result.

Dubai is a popular destination for Indian airlines such as Jet, and flydubai, the airport-based company, is a major customer of the Max plane.

Also, passenger traffic was disappointing in 2018, as it was expected to return to record double-digit growth, but recorded growth of only one percent, which is the slowest pace in 15 years

Aircraft landings and takeoffs fell 8.6% to 373,261 in 2019.

Travel traffic is likely to be affected in the first quarter of the year by the outbreak of the Corona virus in China, which has led to travel restrictions and the suspension of flights to and from the world’s second largest economy.

Etihad Airways, the national carrier of the Emirates, announced five days ago that it would sell 38 aircraft, including 22 Airbus A330 and 16 Boeing 777-300ER aircraft, in a deal with KKR. “Investment and Altavier Air Finance.

“The deal provides us with flexibility, while ensuring our commitment to our sustainability goals and maintaining a fleet of the most fuel-efficient and technologically advanced aircraft,” the company said in a statement.

Etihad Airways has suffered annual losses for nearly four years, with an annual loss of more than $1 billion.

These losses led her to search for ways to reduce its expenses, including the expected layoffs of pilots early this year.

And last year, the company said that its total revenue last year, decreased by 2.4%, to $5.86 billion, down from $6 billion a year earlier.

In a statement, it stated that in 2018 it had stopped a number of flights to cities such as: Tehran, Jaipur (India), Entebbe (Uganda), Dallas, Fort Worth, Dhaka, Dar es Salaam and Edinburgh.

The company incurred losses of $1.87 billion in 2016, due to the decline in the value of its assets and the weak returns on its investments in “Alitalia” and “Air Berlin”.