The government's stimulus programme has helped the emirate economy grow by an estimated 1% in the first quarter of 2009, said Dr Omar Bin Sulaiman, Governor of the DIFC and Vice Chairman of UAE Central Bank. In comments to the British Business Group Forum in Dubai on Tuesday, he also said that the psychological impact of the global financial crisis had become as much of an issue as the financial impact.
“This is very much an issue of confidence, both globally and locally. That’s why one of the most important aspects of the Dubai government bond issue has been to increase confidence in the economy,” Sulaiman said.
“Dubai has quickly moved into recovery mode as the economy shows signs that it is improving. We estimate Dubai’s economy to have grown by 1% in the first quarter, fuelled by the government stimulus package and the increase in expenditures.”
The Dubai Government’s 2009 budget saw an increase in public sector spending by 42% to AED37.7bn (USD10.26bn).
“Just as the Dubai success story has become a case study, I am confident that the Dubai rebound story will become a case study as well,” the Governor said, adding: “The most important result of the crisis has been an increase in efficiency within government and government-related companies.”
He noted that confidence is starting to come back to the real-estate sector in Dubai: “Many international investors and funds from the region have expressed their interest in investing again in the Dubai real estate sector,” he stated.
“As for the Dubai International Financial Centre, it has not been significantly impacted by the crisis,” Dr Omar Bin Sulaiman said, noting that the number of applications received in January 2009 was higher than the number in same month a year ago. He also cited the March 2009 edition of the City of London Global Financial Centres Index, which found that Dubai continues to top the list of centres most likely to become more significant over the next several years.
"Nonetheless, we have responded by rigorously reviewing our strategy to maintain our pre-eminent position.”
As part of that review, he said the DIFC and the Dubai Financial Services Authority (DFSA), the sole regulator at the DIFC, will look to forge greater links and cooperation with other regulators and centres regionally and globally, as well as to adapt quickly to the new global financial architecture.
“The DIFC also will aggressively encourage and nurture innovation across its sectors of focus, particularly in the areas of Islamic finance, family offices, captives and private equity. As part of this effort, the DIFC is looking at the overall cost of companies doing business at the centre, to see how it can help them reduce costs associated with creating new products, in terms of DIFC fees for registration of products such as funds and captives.”
Highlighting the importance of government and business cooperation, including with the UK business community, he encouraged business participation in addressing all issues affecting the economy and increased communication between the Dubai government and businesses to address any issues that arise.
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