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Banking, finance and services to lead UAE economic recovery

Senior executives from 25 reputed companies in the UAE believe banking and finance and services will lead the country out of the economic dip, according to a survey conducted by Emirates Business.

While almost everyone polled expected business conditions to improve in 2010, a majority (48 per cent) said these two particular sectors will play a decisive role as the UAE heads towards recovery.

“Banking and finance is a diverse and vibrant element of the UAE economy and it has been affected by the downturn. However, with the positive gains in the markets over recent months, we are seeing the return of investors,” said James Sayer, Senior Manager at Robert Half UAE.

On the other hand, not many are hopeful of the real estate sector. Unlike the previous years, a majority of the survey’s participants believe this sector will play only a tepid role during the recovery phase. Just 16 per cent of the participants said real estate would be a crucial factor in leading the country back to recovery.

And 12 per cent of the poll respondents said there is no one particular sector that will lead the recovery. Rather, it will be a collective growth.

“A more diversified economy will best lead the UAE out of recession. This would broadly be assisted by diversification into areas building intellectual property, such as the technology sector, which create more middle- and high-income jobs,” said Jesse Downs, Director, Research and Advisory Services, at Landmark Advisory.

“None of these sectors, or any other, will be in a position to lead growth on its own during the coming year or two at least. Services, retail and finance can play a stabilising role, while the construction sector could see some revival because of projects in Abu Dhabi,” said another participant.

The remaining 24 per cent of the participants of the survey gave a mixed response. They believe many other sectors such as tourism and hospitality and retail will play an important role alongside banking and finance and services.

A few respondents were also hopeful of infrastructure.

Rami Bazzi, Chief Investment Officer at Injazat Capital, said: “We believe infrastructure will receive an increase in allocations as investors look to diversify away from volatile and uncertain asset classes. There is a wide range of opportunities, especially in the telecom, transport and power sectors.

“With infrastructure development being at the heart of government strategies, there are significant opportunities for the private sector to participate with capital resources as well as technical expertise,” he added

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