Markets around the world including India found themselves lashed on Thursday by fears of fresh financial trouble, this time with its epicentre near home in Dubai, threatening to derail an incipient global recovery and holding huge ramifications for India.
Dubai’s attempts to reschedule its debt has cast a shadow on a world only just emerging from the worst economic crisis since the 1930s, knocking markets from Sydney to Sao Paulo.
For India, which has tens of thousands of its citizens living and working in the emirate, the concerns are more direct: thousands of its expats staring at job losses and the economy, sharply reduced trade.
India, which gets nearly a quarter of the remittances from the United Arab Emirates and has lakhs of labourers working in the region, could be worse off than most other nations if the crisis escalates into a full-blown one like the Russian or Argentinean crises of the past. India’s exports to the UAE stood at $23.92 billion in FY09.
Dubai, which borrowed $80 billion in a four-year construction boom to transform its economy into a regional tourism and financial hub, suffered the world’s steepest property slump in the global recession. Home prices fell 50% from their 2008 peak.
Banks around the world have written off more than $1.7 trillion as the credit crisis trashed the value of their assets.
Dubai World’s lenders are said to include Credit Suisse Group, HSBC Holdings, Barclays, Lloyds Banking Group and Royal Bank of Scotland Group, all of which saw their shares fall. Credit Suisse fell 3.3% in Zurich, HSBC slid 4.3%, Lloyds sank 3.9% and RBS retreated 4.2% in London, where a trading glitch halted trading in many stocks.
It is a good consolidation of the events that has rocked not only India but rest of the world on account of the hapenings at Dubai. It is very simple, informative and conclusive. I am benefited on a reading of your gimples of the Dubai World.
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