Dubai chamber commerce warns that 70 percent businesses could go bust due to coronavirus
Dubai chamber commerce warns that 70 percent businesses could go bust due to coronavirus
Dubai's chamber of commerce has painted a bleak picture for the UAE's most well-known city.
2 min read
Dubai companies are concerned about the future [Getty]
Seventy percent of Dubai businesses fear they could go bust in the next six months due to the financial problems brought about by the coronavirus crisis, a study revealed on Thursday.
Dubai's Chamber of Commerce carried out a survey of the businesses in the emirate in April to judge the economic impact of lockdowns enacted during the coronavirus crisis and released the bleak predictions for the coming six months on Thursday.
Dubai's Chamber of Commerce carried out a survey of the businesses in the emirate in April to judge the economic impact of lockdowns enacted during the coronavirus crisis and released the bleak predictions for the coming six months on Thursday.
The measures introduced to stem the spread of Covid-19 has seen people confined to their homes and almost all commercial activity halted.
Despite easing some of the lockdown measures, Eid will see further restrictions enacted.
Fears of a new wave of infections and deaths could extend the lockdowns, which would have disastrous consequences for business.
Around 1,228 CEOs from Dubai businesses took part in the survey, conducted between 16 and 22 April.
More than two-thirds of those interviewed saw a "moderate to high-risk" of their businesses going under in the next six months, according to CNBC.
More than 40 percent saw their companies going out of business in the next six months.
Dubai, unlike the UAE's capital Abu Dhabi, does not have large oil reserves and instead relies on its liberal business environment that has allowed real estate, retail, tourism and finance to flourish.
Among the hardest hit sectors will be tourism, with nearly three-quarters of businesses expected to close within the coming month due to the lockdowns and flight bans.
"Full and partial city-lockdown measures are bringing demand in key markets to a standstill... The double-shock impact is pushing economic activity down to levels not seen even during the financial crisis," the Dubai Chamber said in its report.
Added to the burdens for Dubai companies are the massive job cuts in the UAE, which will further dent spending in the city.
Dubai announced a $408 million package to boost the economy in March, while Abu Dhabi also unveiled a more substantial $27 billion stimulus plan, despite its own financial woes due to low oil prices.
A $70 billion debt relief plan was also unveiled by the UAE central bank, which has seen some lending to businesses.
Despite the huge amounts of money being poured into the economy by the UAE government, the Dubai chamber of commerce still predicts probably the worst financial crisis in decades will hit the emirate.
"The impact of COVID-19 crisis on the world economy during 2020 is projected to be greater than the 2008-09 financial crisis," it wrote.
Despite easing some of the lockdown measures, Eid will see further restrictions enacted.
Fears of a new wave of infections and deaths could extend the lockdowns, which would have disastrous consequences for business.
Around 1,228 CEOs from Dubai businesses took part in the survey, conducted between 16 and 22 April.
More than two-thirds of those interviewed saw a "moderate to high-risk" of their businesses going under in the next six months, according to CNBC.
More than 40 percent saw their companies going out of business in the next six months.
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Dubai, unlike the UAE's capital Abu Dhabi, does not have large oil reserves and instead relies on its liberal business environment that has allowed real estate, retail, tourism and finance to flourish.
Among the hardest hit sectors will be tourism, with nearly three-quarters of businesses expected to close within the coming month due to the lockdowns and flight bans.
"Full and partial city-lockdown measures are bringing demand in key markets to a standstill... The double-shock impact is pushing economic activity down to levels not seen even during the financial crisis," the Dubai Chamber said in its report.
Added to the burdens for Dubai companies are the massive job cuts in the UAE, which will further dent spending in the city.
Dubai announced a $408 million package to boost the economy in March, while Abu Dhabi also unveiled a more substantial $27 billion stimulus plan, despite its own financial woes due to low oil prices.
A $70 billion debt relief plan was also unveiled by the UAE central bank, which has seen some lending to businesses.
Despite the huge amounts of money being poured into the economy by the UAE government, the Dubai chamber of commerce still predicts probably the worst financial crisis in decades will hit the emirate.
"The impact of COVID-19 crisis on the world economy during 2020 is projected to be greater than the 2008-09 financial crisis," it wrote.
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