Sheikh Mohammed: The worst of the crisis is over

Last year there was a view among some that the downturn was a problem for the West and would have little impact on the UAE.

But Sheikh Mohammed said that with the global nature of the downturn, 'it was expected that our country would not be immune'.

He believes that the global panic phase is now over and within the UAE, the country has 'overcome the crisis with the least amount of losses'.

He said that no preventative measures would have insulated Dubai, the UAE or any other country from the impact of the global economic downturn, but said the conservative policies overseen by the Federal Central Bank and a liberal economic approach helped prevent any cases of bankruptcy among the UAE's banks and major corporations.

'The impact of the crisis on our economy was significant during the last quarter of 2008, yet it was not as harsh as on other major economies,' he told journalists.

'None of the economy sectors was snapped. We are currently implementing plans and programs of action to benefit from the lessons of the crisis and ensure the recovery of the negative effects.'

The actions taken by the Federal Government, he said, were a 'well thought-out' response to overcome the global crisis, which took longer to reach the UAE but saw many companies rapidly laying off employees, particularly in the property and banking sectors.

'We are monitoring and following up our situation and the development of all the economic sectors through federal and local specialized committees, just as we follow developments in the global economy and international markets.'

Analysts have said that the banking system in the country needs more liquidity and in part, one of the actions taken by the government - Dubai launching $20bn, five year bonds - looked to fill that gap. The UAE Central Bank subscribed to the bond with $10bn.

But as the impact of the global crisis began to be felt in Dubai, including the slowdown or cancellation of various projects, rumours persisted that the emirate was looking to sell off some of its key state -owned assets, such as airline Emirates, to Abu Dhabi.

Sheikh Maktoum dismissed these rumours: 'Rest assured that between Abu Dhabi and Dubai, there is no buying and selling. Everything in Dubai belongs to Abu Dhabi and Dubai and the rest of the UAE, and all that is in Abu Dhabi belongs to Dubai and Abu Dhabi, and the rest of the UAE,' he wrote.

Asked about the layoffs at state owned Dubai Holding, he pointed to the fact that companies around the world have had to make redundancies and review their growth and expansion plans. "Dubai Holding is not an exception at all. All its companies work on a commercial basis, and it is normal to lay off the employees who do not have roles to play during this situation.'

While layoffs among the bigger companies have made the news, the downturn poses a particular threat to small and medium businesses, which in turn has damaging implications for the economy.

Sheikh Mohammed said that the economy is in better shape than in many countries, so the 'contraction it [the small and medium business sector] has suffered is only temporary.'

You can read the full transcript of HH Sheikh Mohammed bin Rashid Al Maktoum's question and answer session with the press on the UAE Prime Minister website.