UAE’s economic crisis is reflected in the country’s foreign assets decline
The economic crisis in the UAE is exacerbated in several directions to cast a negative shadow on all sectors, the latest being the retreat of foreign assets of the country by 0.8% in the third quarter of this year.
The UAE central bank said its foreign assets fell 0.8 percent to 374.3 billion dirhams ($101.91 billion) in the third quarter.
The bank attributed the main reason for the decline to a 84.8% drop in foreign securities, equivalent to a decline of 33.3 billion dirhams, according to Reuters.
The decline was offset by increases in current account balances and bank deposits abroad, which rose by 27.5 billion dirhams at the end of the period, and an increase of 3 billion dirhams in other foreign assets.
Meanwhile, Dubai Financial Market (DFM) fell on financial and real estate stocks.
Dubai’s index slipped 1.4% in early trade, led by real estate and banking stocks. Emirates NBD, the emirate’s largest bank, fell 2.2 percent and Emaar Properties fell 1.2 percent.
Following the market close, Emaar Properties said third-quarter net profit jumped 20 percent, driven by strong performance in real estate, shopping malls and hospitality.
In Abu Dhabi, the index fell 0.7 percent, down for the third straight session, with First Abu Dhabi Bank falling 0.8 percent and Abu Dhabi Islamic Bank 4.7 percent.
The stock fell after reporting a net profit of 620 million dirhams ($169 million) in the third quarter, compared to a net profit of 589.5 million dirhams in the same period last year, but profit decreased compared to the second quarter of this year.
The slowdown in vital sectors such as real estate and retail is dominating the UAE economy.
The rate of inflation in the negative range on an annual basis, for the ninth month in a row, where data issued by the Federal Competitiveness and Statistics Authority, earlier this month, that the inflation rate contracted in September last, compared to the same month last year, It registered a negative 2.17 per cent.
Negative inflation, according to the classification of international financial institutions, including the International Monetary Fund, to the decline in economic activity and low credit, which significantly affects production and pushes into recession and increases unemployment and financial default.
Investors’ fears are mounting that the economic sectors, especially real estate, trade and aviation in the UAE in general and Dubai in particular, are being hit hard by the tensions in the Gulf region.
International rating agencies, including Standard & Poor’s, have warned of a financial crisis if Dubai’s real estate sector continues to weaken and real estate and contracting companies fail to pay bank loans.
