The Economy of the UAE
Dubai's 2009 Debt Crisis
When the global financial crisis hit, Dubai World needed to restructure debt, and Abu Dhabi provided a rescue.
Even booming cities face busts.
The boom
Dubai borrowed heavily to fund property and mega projects.
The crash
In 2009, property prices fell and Dubai World asked to delay debt payments.
The rescue
Abu Dhabi provided about $10 billion in support.
Lesson
Leverage magnifies risk, and city-states need backers.
A helping neighbour
Abu Dhabi stepped in to protect the wider UAE's reputation.
Assuming success removes the risk of crisis
Boom and bust cycles occur.
Key takeaways
- Dubai World sought to restructure debt.
- Abu Dhabi helped.
- Prices fell sharply.
- Leverage is risky.
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