The UAE’s economy should see an upturn from the end of Q3 or the beginning of the Q4. However, much of this upturn hinges essentially on the UAE banking sector that needs to be more flexible in terms of extending credit line to businesses, large and small, according to the head of one of the largest family firms in the UAE and the GCC.
“There is an urgent need for banks to start supporting businesses by extending credit. Although, at present it seems difficult for banks as their balance sheets are under pressure and are waiting for the economic turnaround, but if banks don't pump in liquidity at this critical time it would impact their profitability as well as the whole economy,” Mishal Kanoo, Deputy Chairman, the Kanoo Group, told Emirates 24|7.
“Therefore, we need banks to change that mentality. If banks wish to jumpstart the real estate sector, all they have to do is lower their interest rates and extend the mortgage repayment period for borrowers, and when the market returns to a bit normal condition they could rollback these stimulus measures,” he said.
Kanoo Group has a range of business verticals across the UAE as well as the GCC. Although Saudi Arabia is the fastest growing market for the group as a whole, the UAE continues to be the largest market for its travel business segment.
“Our travel business is doing better in the UAE, compared to other markets in the Gulf,” he said.
The UAE, especially Dubai, is the largest travel destination in the Middle East that has remained unfazed by the global financial downturn, especially the corporate travel segment. “Our business travel segment this year, both inbound and outbound, has been much better than last year,” Kanoo added.
He said the second half is going to be better than the first half in the UAE. However, the one factor that would perhaps obstruct the return to normalcy would be the banks continuing with their conservative mindset of not allowing liquidity back into the economy, Kanoo said.
“We don't believe that the UAE economy is going to grow back on its massive projects. Rather, it's going to grow on the strength of its small-to-medium size projects and companies, which are going to be the drivers of the economy going forward,” he added.
Recently, Kanoo Engineering, part of Kanoo Group, inaugurated its headquarters in Dubai Industrial City.
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