70% of Dubai companies expect to go out of business within six months due to coronavirus pandemic, survey says.

Almost half the restaurants and hotels surveyed by the Dubai Chamber expected to go out of business in the next month alone, with three-quarters of travel and tourism companies expecting to close in that time.

Dubai, which has one of the most diversified and non-oil dependent economies in the Gulf, relies on sectors like hospitality, tourism, entertainment, logistics, property and retail.

Its hotels and restaurants are internationally acclaimed, but nearly half the restaurants and hotels surveyed by the organization expected to go out of business in the next month alone. Some 74% of travel and tourism companies said they expected to close in that time, and 30% of companies in transport, storage and communications expect the same fate.

A population contraction?
But amid the current uncertainty, businesses in UAE’s seven emirates, as elsewhere across the world, are slashing salaries, putting employees on unpaid leave, and reducing staffing levels.

The UAE has just over 26,000 confirmed coronavirus cases, with 233 deaths as of Thursday. Dubai, the country’s commercial and tourism hub, imposed a strict 24-hour lockdown on its population of 3.3 million for about three weeks beginning in early April.

For a country that relies on an 80% expatriate population for much of its economic activity, the stakes are even higher: if residents can no longer find work, they will likely return to their home countries, depleting the consumer base needed to enable any economic recovery.

More than 150,000 Indian nationals and 40,000 Pakistani nationals had already left or registered to leave the UAE by early May, according to those countries’ diplomatic missions.

But the global pandemic will likely exact a toll on Dubai far greater than the downturn of a decade ago. The Chamber’s report warned: “The impact of COVID-19 crisis on the world economy during 2020 is projected to be greater than the 2008-09 financial crisis.”

Read more: https://tinyurl.com/yadlzllo

Source:  CNBC


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Published: 9th June 2020.