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Is Dubai facing another debt crisis?

Efforts to contain the coronavirus will cause Dubai’s economy to contract sharply, exacerbating overcapacity in key sectors and making it more difficult for the Emirate’s government-related entities (GREs) to service their large debts. Our own database shows that these debts have risen to more than 80% of the Emirate’s GDP. We think that Abu Dhabi would, ultimately, step in with another bailout. But a risk of a repeat of the events of 2009, when support was slow to arrive, is high. That would make the financial market and economic fallout much worse.

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