UAE economy can absorb 'Brexit shock'

The UAE economy will absorb the 'Brexit shock' and will not face any major impact in short to medium-term period, experts say. 

Analysts and leading corporate leaders said UAE-UK bilateral trade and investment relationship continues to be strong and mutually beneficial and will remain on track despite the historic decision to leave the European Union trade bloc on Friday. 

They were of the view that UAE-UK bilateral trade and investment target of £25 billion by 2020 will not be affected due to Brexit and both the nations will continue to explore new avenues of cooperation apart from enhancing existing relationships in energy, SME development, health, education, infrastructure, financial and professional services, they added. The annual bilateral trade hit £12 billion in 2015. 

Nigel Green, founder and CEO of deVere Group, said Britain has decided to leave the European Union and this will have far-reaching global repercussions, including for the UAE. 

"There are pros and cons as always. It means that for those expats who send money to the UK, they will need less dirhams for the same amount of sterling," Green told Khaleej Times. 

DeVere Group is one of the world's largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world - including a large presence in the UAE, over 80,000 clients and $10 billion under advisement. 

To a question, Green said Brexit may have an impact on travel business due to dwindling pound against the major currencies. 

"It also makes visiting the UAE for people in Britain more expensive and this could, naturally, negatively impact the economy, especially tourism and property," he said. 

Atik Munshi, partner at Crowe Horwath, UAE, said Brexit is now a reality. 

"The results of the referendum were rather unexpected and heads have started rolling with the resignation David Cameron. The market have reacted strongly and the British pound has taken a beating," Munshi told Khaleej Times. 

He said the impact of Brexit to the UAE economy and even the world wide economy will be both short term and long term. 

"Short terms impact is apparent from the market reaction, though the long-term impact will be known only in a couple of months' time after the Article 50 of EU exit will be triggered," he said. 

"UK's central bank role will become more important as to how it manages the change and the rates. The effect of Brexit in UAE in my view will only be temporary as far as economy and currency is concerned though the political and visa related effect will be more long term as a lot of matter linked with EU would need resolution," Munshi said. 

Shailesh Dash, chief executive of Dubai-based Al Masah Capital, said this is a historic moment and it's impact on the future of Europe and the rest of the world will be of enormous importance. 

"I am sure the economic impact will be mixed in the short term more negative than positive and one has to see how the phenomena of single markets and collaborations and trading blocs pans out from here onwards.? This has significant importance to European Union as a single trade bloc and other economic matters. 

"Impact on the GCC if any will be very short term particularly the financial markets and currencies. But in the mid and long term it would have no impact on the GCC markets including UAE," Dash concluded. 

Source: Khaleej Times