Dubai’s Strategic Location Helps It Pull Out Of Slump
By Gordon Platt
Dubai’s position as a strategic trading hub has towed it out of its economic slump.
New heights: Dubai economy looks up
Dubai’s position as a strategic trading hub has towed it out of its economic slump, which was triggered by the decline of its property sector. Dubai’s gross domestic product rose 2.2% in real terms in 2010, with rising trade flows fueling the recovery. The emirate’s non-oil exports rose 39% in volume last year, and container shipping rebounded sharply.
DP World, the Dubai-based global container ports operator, reported a 35% increase in 2010 earnings to $451 million and said its long-planned London Stock Exchange (LSE) listing is on course for this year. The company plans a one-for-20 share consolidation, taking another step toward its London listing. Tempering the enthusiasm, however, Dubai-based Topaz Energy and Marine withdrew its planned $500 million initial public offering at the LSE. Topaz said the ongoing political unrest in the region was making it difficult to drum up enough interest, although the IPO may go ahead at a later date.
Meanwhile, financial restrictions imposed on Iran threaten to slow Dubai’s recovery, since it is Iran’s largest trading partner in the Gulf Cooperation Council. At an extraordinary meeting in April chaired by the UAE’s foreign minister, the GCC Ministerial Council denounced Iran for interfering in Bahrain’s internal affairs and accused it of planting a spy network in Kuwait. The ministers also expressed concern about developments in Yemen and called on warring parties to engage in a national dialogue.
In Riyadh, Deutsche Bank began offering trade finance and corporate cash-management services at its wholesale banking branch. The bank said Saudi Arabia is a key strategic and growth market for its regional and global franchise.
Saudi Arabia’s King Abdullah announced a $130 billion public-spending package, with nearly half of the total going to build 500,000 new homes. In addition, education costs will be lowered, and students will receive two months of extra stipend. The program will boost Saudi Arabia’s public spending to an all-time high this year, but the country will still record a surplus, thanks to high oil prices.