Chart Partners’ Schroeder Sees $58 Oil, Recession Risk

Thomas Schroeder, managing director at Chart Partners Group Ltd., talks with Bloomberg’s Rishaad Salamat about technical analysis of the oil market. Speaking from Bangkok, Schroeder also discusses the outlook for U.S. and Asia-Pacific stocks, commodity demand and the Australian dollar.

“Depending on how debt is managed in Dubai, foreigners will decide whether or not they will invest in UAE”

Growth in the Gulf Cooperation Council states is expected to rise to 4.4 percent in 2010 and 4.7 percent in 2011, the Washington-based Institute of International Finance (IFF) said in a report on Monday.

United Arab Emirates is forecast to lag behind the other Gulf countries at two percent growth in 2010 and 3.1 percent the following year in what the report described as a “sluggish recovery.”

However, the report said that the UAE’s “growth could reach 2.7 percent in 2010 and 4.2 percent in 2011″ if debt-laden Dubai successfully resolves its debt issues and accelerates reforms. Read more

Is the Gulf entering or coming out of Recession?

During the last 12 months, analysts and researchers from the most prestigious firms, such as BofA Meril Lynch and EFG Hermes, produced reports aiming to convince the general public that The Recession is well over and behind us.

In 2010, UAE’s GDP growth is roughly projected to reach nearly 2%, while inflation is even slowly rising.

According to the definitions, recession is a business cycle contraction, a general slowdown in economic activity over a period of time. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions, while defaults and the unemployment rate rise. Official recession is declared when the economy contracts for two consecutive quarters and unemployment rises above 10%. Read more

Back to School in a Recession

Having an MBA once guaranteed you a high-flying job with an even higher salary. But that’s not necessarily true anymore. In the wake of the global recession, there are now more skilled jobseekers than there are skilled jobs. But that’s not deterred record numbers of students applying for MBAs this year. But why?

A hearty thanks and a promise for 2010

Dear Readers,

To all those who have followed Dubai Chronicle coverage online, we would like to offer a hearty thanks and a promise for 2010.

In the coming 12 months, we at Dubai Chronicle will continue with our efforts to cover the major business  and financial developments with authority, judgment and imagination. Next year will be just as challenging as 2009.

This year has been a tumultuous year for news: the most serious financial crisis since the Great Depression of 1930; a roller-coaster ride for commodity, energy and real estate prices.

Much of the developed world is still in recession. Turning to geo-political trends, Dubai Chronicle will be watching events in UAE closely.

For business, 2010 will prove testing. We will be paying special attention to those nimble and resourceful enough to exploit a challenging environment, whether in banking, manufacturing or technology. For 2010 will be about winners as well as losers in a challenging economic environment. We will be alert to the threat of a regulatory backlash as well as the threat to competition posed by the likely increased government role in the economy.

Thank you again for your support.

Dubai Chronicle’s Team

Exclusive Analysis on Middle East risk

Middle East analysts from London-based risk consultancy Exclusive Analysis answer emailed questions about Iran, Saudi Arabia and UAE, reported Reuters.

Q: Do you anticipate widespread defaults in the UAE in light of the global credit crisis? Which sectors are most likely to be affected? How will this affect the internal dynamics of the United Arab Emirates and wider politics within the region? What would this mean for risk for other investments in Dubai and the region, such as real estate?

A: We do not think defaults will be the major issue for businesses and financial institutions in the UAE. Despite the high volume of projects announced in real estate, infrastructure, retail and other sectors over recent years, much of this work is being funded by local banks or large semi-public developers and holding companies. Abu Dhabi has amassed a sovereign wealth fund estimated at $350 billion and has readily provided financial support for the UAE’s troubled banks. It has also backed its large real estate developers, minimising the risk of defaults.

Instead, what we are likely to see in the UAE are widespread project delays and cancellations especially in real estate, including commercial and residential developments. Around half of the country’s projects have been cancelled or placed on hold since the financial crisis hit the UAE in late-2008. Read more

The A-Z of Economic Recovery

While financial experts around the world talk of economic recovery, many of us remain boggled by all the jargon.
But apparently it’s as easy as ABC, well V, W, U, L.
Al Jazeera’s Samah El-Shahat took to the streets of London to explain.

Recession or Depression?

A recession is defined to be a period of two quarters of negative GDP growth. By definition is a national or world event and statistical aberrations or one-time events can’t create it, as for a recession to occur the real economy must decline.

Are we in a recession or depression?
While economists can’t even agree on a definition, the simple answer is no, not yet.

A replay of the Great Depression from the 1930 looks far-fetched, thanks in part to the many measures in place, including: bank deposits guarantees  and provisions of sufficient liquidity to the financial system, indicating a certain willingness on the part of the authorities to print money. However, this could be the beginning of a long-lasting recession.

A recession shades into a depression when it stretches out for 36 months. By comparison, the Great Depression lasted from 1930 to early 1940, just before the U.S. entered World War II. Two other depth readings when it comes to depression: a large drop in economic output – some put it at a 10% GDP drop over a year and a rise in unemployment to more than 11%.  As reports  about job losses emerge in the local press on daily basis and the country’s population is relatively small in comparison to the Western economies, it is very much likely the unemployment rate to have reached over 10% during the past 6 months. However, the U.A.E. economy is expected to grow about 3 per cent this year, with national GDP growth estimated to be between 2.5 per cent and 3 per cent. For Dubai is expected to be slightly less than that, according the Gulf News. Read more

Global Markets Roundup

UBS Reduces Bonuses; Boeing to Double Job Cuts; Total Buys Oil-Sands Explorer; Ford’s Fourth-Quarter Loss; Time Warner Cuts 700 Jobs; First Wells Fargo Loss Since 2001; AT&T Posts 4Q Decline

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Global Investments Roundup

Oil slips 5.4%; India widens Satyam fraud probe; Kirin expanding beverage empire; Citigroup reaffirms commitment to Japan; Italian car maker eyes Chrysler stake; Costa Rica crushed by crisis; Brazilian job losses mount; Slim snags bigger NYT stake Read more

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