IslamicFinance.de

After years of strong economic growth, most of the economies of the six-member Gulf Cooperation Council (GCC) began to slow back in 2014. Major layoffs started soon after 2015, with major and minor employers shedding jobs. The cuts continued in 2016 and 2017, too. Most of those made redundant were non-natives and this has had an impact on the real estate sector. Dubai’s DAMAC announced this month that its second-quarter 2018 profits were down 46% year-on-year, while fellow developer Nakheel saw its profits dip 3.8% in the first six months of this year. Retail and tourism also felt the pinch, as the number of shoppers has dropped off. In Dubai there is a general fear in the emirate on speaking out about the economy, leading many to dub this the "silent crisis".

US President Donald Trump has been accused of courting international trade friction and a new international debt crisis. There were already signs given the huge debt built up over a decade of record low interest rates, and that rates had begun rising. The next international debt crisis could well be in the emerging market corporate sector. Global debt has reached US$217 trillion, equal to a record 325% of global gross domestic product. Investors in Brazil, South Korea, Thailand, Chile, Czech and Malaysia especially have been big borrowers. While most of this has been in local currencies, corporates in India, Saudi Arabia, Turkey and Russia as well as Hong Kong and Singapore have borrowed heavily in foreign currency. This creates a currency mismatch situation.