IMF says Dubai World crisis would badly affect UAE recovery

According to IMF official Wednesday statement, Dubai World crisis is supposed to slack United Arab Emirates economic recovery.

 Director for the IMF's Middle East and Central Asia Department Masood Ahmed reported that IMF was looking at revising down its outlook for the UAE's non-oil GDP to "significantly lower" than 3% it had projected in October. That would still be higher than the close to zero forecast the IMF has forecasted for the region in 2009.

 Ahmed doesn’t expect the UAE would need any financial support from the IMF and could easily deal with the fallout with its own resources, in spite of disorder in terms of Dubai crisis.

 The crisis at Dubai World, he considers, may lead to higher credit borrowing costs and may also impact other countries as the conglomerate postpones projects and disposes of assets. Households could also be hit by lower remittances as workers, many of them from neighboring countries, are put out of jobs or unable to find work.

 Ahmed also stated the IMF was also encouraged by Dubai World's announcement it will strive for equitable treatment of creditors in the debt talks but emphasized they should go further to ensure a smooth transition.

 Expecting lending money to Dubai World is to become "contained and manageable", he believes that continuous engagement and communication with creditors and investors will be critical to ensure an orderly and timely solution.

 Ahmed the Dubai collapse could lead to financiers and investors paying closer attention to guarantees of commercial corporations owned by governments, and may also trigger a broader reassessment of commercial risk and property.