Dubai will manage its debts: Report

DUBAI: Dubai will be able to tide over the current debt crisis but real estate and leisure tourism sectors will take much longer to recover, says a media report.

Attributing to the Economist Intelligence Unit (EIU), Emirates Business said, "Dubai will be able to manage the current debt problem."

Analysts in the UAE supported the view and said they believed the debt problem would have little impact on UAE banks given their massive resources and a sharp increase in their loan-loss provisions this year.

"Our view is that the strictly financial aspects of this crisis can and will be managed through identifying the really distressed assets and paying off creditors through liquidation proceeds and financial support from Abu Dhabi," EIU's Middle East Editor David Butter told Emirates Business.

However, there would be long-term economic consequences. Real estate and leisure-based tourism development would struggle for growth for sometime to come and prospects for the financial sector are not good, the report said citing EIU.

"Dubai's core competence as a logistics and trade centre will help carry it through this crisis, but there is little chance of a return to normal business," the daily said.

Although some banks in the UAE have already revealed their exposure to the Dubai World, analysts believe this would have no major impact on the general performance of the country's banking sector.