Poll: 70% of Dubai companies may exit the market within 6 months due to SK

A poll conducted by the Dubai Chamber of Commerce Thursday revealed that 70% of companies in Dubai expect to close their doors within the next six months, due to the outbreak of the Corona virus and the global closure situation.

The CNBC website said that the Chamber surveyed 1,228 executives across a group of sectors between 16 and 22 April last, during the most stringent closure period in the emirate, and that nearly three quarters of these were small companies that include less Of twenty employees.

And the Natasha Torak article on the site stated that more than two-thirds of the managers surveyed spoke of a medium to high possibility of leaving work in the next six months, and 27% of them said they expected to lose their business during the next month, and 43% expect to leave the market within six months .

Impasse

The website pointed out that Dubai, which enjoys one of the most diversified economies and is not based on oil in the Gulf, depends on sectors such as hospitality, tourism, entertainment, logistics, real estate and retail, as its hotels and restaurants receive international acclaim.

However, nearly half of the restaurants and hotels surveyed expect to stop working next month, and 74% of travel and tourism companies said they expect to close at that time, while 30% of transport, storage and communications companies expect the same fate.

The Dubai Chamber wrote in its report, which was published yesterday, Thursday, that "measures to close the city in whole or in part will lead demand in the main markets to a dead end, and that the impact of the double shock is pushing economic activity to levels not seen before even during the financial crisis."

Later, a Dubai Chamber spokesperson smoothed out some of the poll results, saying in a statement that "Dubai Chamber surveyed 1,228 of the 245,000 companies in Dubai, at a time when the closing procedures were in the most severe stage, and their feelings were based on the expectation of prolonging the closing phase "We expect business confidence to improve significantly in the coming weeks and months as companies return to their normal operations," he added.

Population deflation
But in light of the current uncertainty, companies in the seven constituent Emirates of the United Arab Emirates - as is the case elsewhere in the world - reduce salaries, put employees on leave without pay, and reduce levels of employment.

The website pointed out that the UAE has more than 26,000 confirmed cases of the Corona virus, with 233 deaths as of Thursday, forcing Dubai - the country's trade and tourism center - to impose a strict 24-hour ban on its population of 3.3 million for a period of three weeks. It started in early April.

Reducing the closure during the month of Ramadan allowed commercial centers and some companies to open with a capacity of 30%, but the return was slow, and most hotels are empty and tourism is not present, as passenger flights for non-Emiratis have stopped since 24 March last year.

The site pointed out that the risk seems great for a country that relies on 80% of the expatriate population in a large part of its economic activity, so that they are more likely to return to their countries of origin if they can no longer find work, and thus the country loses the consumer base necessary to enable any economy to recover .

According to diplomatic missions, more than 150,000 Indian citizens and 40,000 Pakistani citizens have already left or registered to leave the UAE by early May.

The former director general of the Dubai government's finance department, Nasser al-Sheikh, said earlier this month that he believed "the minimum population shrinkage will be 10% this year."

The Dubai Chamber added in its report entitled "The impact of Covid-19 on the business community in Dubai", that "the markets of the Gulf Cooperation Council countries suffer a special challenge, because they suffered from weak oil prices and the Covid-19 shocks, but this shock is temporary, and recovery will appear in a form Step by step once the restrictions are eased. "

"The Dubai government continues to monitor and provide support when necessary to assist the business community in Dubai during this period," a Dubai Chamber spokesman said in the hours after the survey was published.

Economy is slowing
and the site warned that the Corona crisis comes after several years of declining revenues for some of the most important sectors of the emirate, especially real estate and hospitality, where residential real estate prices decreased by 30% from their peak in 2014 amid increased supply and weak demand, and revenues for each hotel room available were decreased by more than 25% since 2015.

Although the Dubai economy grew by 1.94% last year, this is the slowest pace since the dark days of the economic collapse in 2009.

The site concluded that the Corona global epidemic is likely to result in far more losses in Dubai than the contract it witnessed a decade ago, especially as the Chamber’s report warns that the impact of the Covid-19 crisis on the global economy this year will be greater than the 2008 financial crisis. 2009 ".