Corona Chaos: Will Dubai Businesses Shut Down in the Next 6 Months?

Corona Chaos: Will Dubai Businesses Shut Down in the Next 6 Months?

One of the Gulf’s most diversified economies, Dubai, has been known for its flourishing future when it comes to business. The thriving sectors like hospitality, tourism, entertainment, logistics, property and retail have been the areas with the highest returns. Dubai has always been known for its lavish hotels and restaurants internationally. However, due to the unfortunate outbreak of COVID-19 and a very strict lockdown, nearly 50% of these iconic restaurants and hotels are expected to close down in less than 6 months. Around 74% of travel and tourism companies are expected to close within that time and about 30% of companies dealing in transportation, storage and communication will also meet the same fate.

Partial and full city lockdown and flying restrictions are bringing the key demand sectors to a standstill. The Dubai Chamber wrote in its report that the impact of covid-19 on the Dubai business community is going to leave a very negative long-lasting impact. The Chamber spokesperson said some of the survey conducted showed a drastic downfall for 1,228 out of 24,5000 companies in Dubai in April when the lockdown measures were in their strictest phase.

Like many other economy-sick countries, UAE’s 7 emirates are slashing salaries, reducing staff levels or putting employees on unpaid leave. UAE has over 31,000 confirmed coronavirus cases, and the country’s commercial and tourism sector imposed a strict 24-hour lockdown on its population of 3.3 million beginning in April. While the lockdown was loosened for the holy month of Ramadan, allowing malls to open and some businesses at 30% capacity, the layoff are continuing.

Most of the hotels are empty, and tourism is almost nonexistent. Inbound passenger flights for non-residents are already closed since March 24. In a country where 80% of the population relies on the expatriate population, the chances of survival are difficult.

If non- natives don’t get a job; they are most likely to go back to their home country. More than 1,50,000 Indian nationals and 40,000 Pakistani nationals had already registered or left UAE by early March. Dubai chamber also added that although it is temporary, the recovery from the shock will be slow due to double and COVID conditions.
In this situation, the Dubai government has already announced the 1.5 billion dirham stimulus package to improve the liquidity and question the flow of virus lockdown. This included a raft of fee refunds and reductions.

Abu Dhabi has also announced a 27 billion-dollar emergency stimulus plan to help the struggling private sector businesses and banks.

The central park also deployed a 70 billion dollar package to help banks in debt relief. One of the main reasons for this is that the UAE’s economy was already going slow pre- COVID. The residential property prices had already fallen 30% from 2014; revenue per hotel room was also down by more than 25% since 2015. Apart from that, Dubai is economy grew by a mere 1.94 percent, which is the slowest since the 2009 economic collapse. However, the Chambers report warned that the impact of the covid-19 crisis on the world economy will hit worse than 2008-2009 financial crisis. Although these reports describe the current situation, we will have to wait to see the actual economical devastation not only in Dubai, but the entire world.

You May Also Like