Europe's debt crisis could spell trouble for Gulf countries given their tight links with the global economy and hefty exports of oil, tourism and investment to the continent, economists said after the euro's slide to a four-year low against the dollar.
Crude oil also dipped below US$70 a barrel for the first time in three months as concerns about Europe's sovereign debt crisis mounted.
The euro traded at $1.22 yesterday, its lowest point since April 2006, before recovering slightly. The currency has fallen by 12 per cent in the past week alone as European leaders and the IMF cobble together a US$1 trillion (Dh3.67tn) bailout for Greece and other deeply indebted European countries.
The German chancellor Angela Merkel, who is visiting the Gulf next week to discuss energy security, climate change and the financial crisis, said on Sunday that the $1tn package was no more than a temporary fix that would give the embattled region time to implement much-needed political and structural reforms.
"We've done no more than buy time for ourselves to clear up the differences in competitiveness and in budget deficits of individual euro zone countries," Mrs Merkel said.
All Gulf currencies except Kuwait's are pegged at fixed rates to the dollar. That means moves in the dollar's strength directly affect the dirham and most other regional currencies.
"The simple answer is it's bad," said Giyas Gokkent, an economist at the National Bank of Abu Dhabi. "One direct reason is when the dollar is strong, asset and commodity prices tend to fall, and you've seen the oil price come down from the mid-$80s about 10 days ago. So that's a direct hit on oil revenues and the value of exports."
The principal effect of a fluctuation in exchange rates like the one seen with the euro in recent weeks is on the balance of trade, economists say. A stronger dollar, and by extension a stronger dirham, means European goods and services become cheaper for people in dollar-based economies. That cheapness tends to encourage imports from Europe.
A weaker euro also means Europeans must pay more for goods and services produced in dollar economies, including the UAE and most of the oil-exporting Gulf countries. That tends to discourage exports, though the decline in oil prices to about $72 per barrel has somewhat offset the fall in the amount of oil a euro can buy.
While direct trade between the Gulf and Europe was "pretty modest", Simon Williams, HSBC's chief economist for the Middle East, said the global financial crisis had demonstrated that the region's countries were not immune to external economic shocks. The bigger question, he said, was whether Europe's woes would lead to wider economic turmoil that could envelop the Gulf.
"I don't think it's going to have a major bearing on export growth here," he said. "I'm sure that there will be significant local holdings of euro-denominated assets falling in value, but ultimately the real issue is that the problems in the euro zone raise the possibility of a double-dip global recession."
Tourism, another of the UAE's main non-oil exports to Europe, could also suffer under a protracted decline in the currency's value, according to Tim Fox, an economist at Emirates NBD.
With renewed strains in Europe, economists also say the continent's banks may be more reluctant to lend to companies in the Gulf as they focus on ridding themselves of the spectre of bad debt back home. That could make raising money from international lenders to finance large property and infrastructure projects more difficult. Fear over the European crisis may also push global investors away from the Gulf's emerging markets and towards such safe assets as US treasuries and gold, economists say.
afitch@thenational.ae
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The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
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A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
The biog
Name: Salvador Toriano Jr
Age: 59
From: Laguna, The Philippines
Favourite dish: Seabass or Fish and Chips
Hobbies: When he’s not in the restaurant, he still likes to cook, along with walking and meeting up with friends.
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Company%20Profile
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India team for Sri Lanka series
Test squad: Rohit Sharma (captain), Priyank Panchal, Mayank Agarwal, Virat Kohli, Shreyas Iyer, Hanuma Vihari, Shubhman Gill, Rishabh Pant (wk), KS Bharath (wk), Ravindra Jadeja, Jayant Yadav, Ravichandran Ashwin, Kuldeep Yadav, Sourabh Kumar, Mohammed Siraj, Umesh Yadav, Mohammed Shami, Jasprit Bumrah.
T20 squad: Rohit Sharma (captain), Ruturaj Gaikwad, Shreyas Iyer, Surya Kumar Yadav, Sanju Samson, Ishan Kishan (wk), Venkatesh Iyer, Deepak Chahar, Deepak Hooda, Ravindra Jadeja, Yuzvendra Chahal, Ravi Bishnoi, Kuldeep Yadav, Mohammed Siraj, Bhuvneshwar Kumar, Harshal Patel, Jasprit Bumrah, Avesh Khan
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
COMPANY%20PROFILE
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Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
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Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Schedule for Asia Cup
Sept 15: Bangladesh v Sri Lanka (Dubai)
Sept 16: Pakistan v Qualifier (Dubai)
Sept 17: Sri Lanka v Afghanistan (Abu Dhabi)
Sept 18: India v Qualifier (Dubai)
Sept 19: India v Pakistan (Dubai)
Sept 20: Bangladesh v Afghanistan (Abu Dhabi) Super Four
Sept 21: Group A Winner v Group B Runner-up (Dubai)
Sept 21: Group B Winner v Group A Runner-up (Abu Dhabi)
Sept 23: Group A Winner v Group A Runner-up (Dubai)
Sept 23: Group B Winner v Group B Runner-up (Abu Dhabi)
Sept 25: Group A Winner v Group B Winner (Dubai)
Sept 26: Group A Runner-up v Group B Runner-up (Abu Dhabi)
Sept 28: Final (Dubai)
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
Tell-tale signs of burnout
- loss of confidence and appetite
- irritability and emotional outbursts
- sadness
- persistent physical ailments such as headaches, frequent infections and fatigue
- substance abuse, such as smoking or drinking more
- impaired judgement
- excessive and continuous worrying
- irregular sleep patterns
Tips to help overcome burnout
Acknowledge how you are feeling by listening to your warning signs. Set boundaries and learn to say ‘no’
Do activities that you want to do as well as things you have to do
Undertake at least 30 minutes of exercise per day. It releases an abundance of feel-good hormones
Find your form of relaxation and make time for it each day e.g. soothing music, reading or mindful meditation
Sleep and wake at the same time every day, even if your sleep pattern was disrupted. Without enough sleep condition such as stress, anxiety and depression can thrive.
Karwaan
Producer: Ronnie Screwvala
Director: Akarsh Khurana
Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar
Rating: 4/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Company%C2%A0profile
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Naga
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The Details
Kabir Singh
Produced by: Cinestaan Studios, T-Series
Directed by: Sandeep Reddy Vanga
Starring: Shahid Kapoor, Kiara Advani, Suresh Oberoi, Soham Majumdar, Arjun Pahwa
Rating: 2.5/5
I Feel Pretty
Dir: Abby Kohn/Mark Silverstein
Starring: Amy Schumer, Michelle Williams, Emily Ratajkowski, Rory Scovel
List of alleged parties
May 15 2020: PM and Carrie attend 'work meeting' with at
least 17 staff members
May 20 2020: PM and Carrie attend 'bring your own booze'
party
Nov 27 2020: PM gives speech at leaving do for his staff
Dec 10 2020: Staff party held by then-education secretary
Gavin Williamson
Dec 13 2020: PM and Carrie throw a flat party
Dec 14 2020: London mayor candidate Shaun Bailey holds staff party at Conservative
Party headquarters
Dec 15 2020: PM takes part in a staff quiz
Dec 18 2020: Downing Street Christmas party
Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.