Its definitely not a welcome development, as many of us had seen this coming and this is not likely to have such a severe impact on businesses as it is made out to be. Yes, the region is already facing the impact of the global slowdown in economies reckons Manoj Loya, a senior executive with a fast moving consumer goods company based in Dubai.
There will be some impact when the Dubai market opens on Monday. That it will open down is obvious; however the Eid holidays have given time for people to sift through the announcements and actually take rational decisions, says another senior executive with a multinational bank in Dubai requesting anonymity.
The announcement was made late on Wednesday evening and this was just when most of the Middle East market was on Eid holidays. So there was no immediate panic. And now people have realised that Dubai is not going down. It is a mere postponement of debt obligations and not a default. The holidays have made a difference, he adds.
The fact that the real estate market was over-hyped was known since long and that there would be lay-offs, especially of Indian labourers was also known by many. Many Indian expatriates have been laid off in the last couple of years, so there is no event related trigger, says Anis Ahmed Iqbal, a construction consultant in Dubai.
According to government data around 45 lakh Indians live and work in the Gulf region and remit more than $10 billion annually.
At the moment there is hope that the Abu Dhabi sovereign funds would bail out Dubai World, the emirates investment company, which decided to delay repayment of its $59-billion debt. This is not a large amount for the funds, says another investment banker.
However, many are watching developments with a bated breath hoping that the Dubai World incident was just one case and not the first amongst a series of mishaps that was witnessed by the global financial world last year as Lehman Brothers started a series of announcements that rocked the globe.