ISAS Briefs

This paper focuses on the ongoing debt crisis in Dubai and other recent economic setbacks in the United Arab Emirates (UAE), and assesses their likely impact on South Asia. Owing to the region's lower exposure to Dubai World's over-leveraged debt, the impact on South Asia's financial markets is likely to be limited. However, South Asia's real economies, particularly those related to remittances, could be adversely affected as Dubai's real estate bubble bursts and the UAE counts the impact of the financial crisis. The real downside risk for the South Asian region, nevertheless, is the sustainability of the dubious 'Dubai model' which has been emulated in the Gulf neighbourhood and one that absorbs a large number of South Asia's surplus manpower.