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29 March 2024

Double-dip recession unlikely in UAE, say experts

In an interesting book by Elliott Wave International, Conquer the Crash, it highlights what all an individual can do in time to come. (FILE)

Published
By Shuchita Kapur

Even as many economists predicted that The Great Recession was officially over, the ugly face of a double-dip recession seems to be surfacing once again says the other camp. As energy prices escalate, we witness a steep rise in global food inflation, which is a major factor that could stall the economic recovery process.

But what is in store for us in the UAE? Will we remain immune the second time, if it were to come or will the ripple affect us as it happened last time? Regional experts believe that double-dip is an unlikely scenario.

According to MR Raghu, Vice President-Research at Kuwait Financial Centre (Markaz), the fears of a double-dip seem to be over-stated. “I don't think so,” he says when asked if he saw the threat of a double-dip recession on the horizon.

“Yes, oil price is near a dangerous threshold and if it pierces $150 to $200 [per barrel], then it will have an impact on global growth. However, remember that the epicenter for global growth has shifted to emerging markets, which have tremendous resilience to high oil price and food price inflation,” he told Emirates 24|7.

According to Giyas Gokkent, Group Chief Economist at National Bank of Abu Dhabi (NBAD), this may not be the case. “Provided central banks do not raise interest rates aggressively, a double-dip is not likely at this time. Energy prices may moderate somewhat once politics gets out of the way,” he told this website.

Talking specifically about the UAE, he says “[the country] is doing very well with high oil prices; a potential global slowdown would obviously impact oil prices, but that is not on the cards right now.”

Commenting on whether consumers should shift into savings mode, he added: “low rates encourage expenditure and discourage savings.” Raghu, on the other hand, suggests investments in commodities. "Exposure to gold and other commodities can be a good strategy," he said.

In an interesting book by Elliott Wave International, Conquer the Crash, it highlights what all an individual can do in time to come. It has an entire list of “don’t” that can help people survive even in a deflationary economy.  

“Recall the old Chinese character that entwines crisis and opportunity in the same glyph. Position yourself to take advantage of what’s coming,” it says.

“Generally speaking, don’t own stocks. Don’t own any but the most pristine bonds. Don’t invest in real estate. Don’t buy commodities. Don’t invest in collectibles. Don’t trust standard rating services. Don’t presume that government agencies will protect your finances. Don’t buy goods you don’t need just because they are a bargain. They will probably get cheaper,” the book cautions the consumer.