Last Saturday saw the running of the 17th (and probably best) Dubai World Cup and, to the delight of many,  two of HH Sheikh Mohammed Rashid Al Maktoum’s 5 year olds, Monterosso and Capponi, romped home one and two in the world’s richest horse race.

The US$10 million race was sponsored by Emirates Airline, which is hoping to become the largest airline in the world by 2015. Few will be surprised. As part of their strategy to achieve this target, the airline announced a major branding and marketing campaign. Their strap line for the past ten years – “Keep Discovering” – is being replaced by “Hello Tomorrow”. However, how long this lasts remains to be seen.

Although the Dubai airline continues to be the main driver in the emirate’s economic upturn, the cruise industry is also becoming a major player. Only ten year ago, the annual passenger rate was 7,000 arriving at Port Rashid. This number has now reached almost 400,000 with an estimate that this market will increase by a further 50% over the next three years. This can only be good news for the local economy.

Whilst on the topic of shipping, Dubai World’s shipbuilding unit filed for insolvency protection this week in its aim to finalise its US$ 2.2 billion restructuring proposal. Although it had the support of most of its creditors, it seems that this action was taken because a minority – mainly from hedge funds – have decided to hold out for reasons best known to themselves.

Dubai Metro – which may have cost in excess of US$ 7 billion to build – is on the fast track to financial viability and is expected to break even by 2017. Some have estimated that the metro and the improved bus service may have saved Dubai up to US$ 1.3 billion a year in terms of time wasted.  Over the past five years, the number of passengers using public transport has jumped from 91 million to almost 200 million.

An interesting aspect of the Metro (but not unforeseen) is that the Roads and Transport Authority (RTA) have noted the positive impact on the value of properties in the vicinity of Metro stations, which have seen hikes as much as 34%.

It comes as no surprise that real estate again dominated the local business news. Statistics from the Dubai Land Department show a 20% increase in the number of transactions (over 35,000) taking place in 2011 with a total value of US$ 39 billion.  Indians and Brits continue to dominate the market and 75% of transactions were for apartments accounting for US$ 11.7 billion in value. At the higher end of the market there have been significant price increases that go to show that Dubai is alive and well again.

Most people associate Dubai with gold as it accounts for almost 20% of physical global trades, with India – at 950 tonnes – its biggest customer. It may come as a surprise then to see that the “City of Gold” is rapidly becoming a major centre for diamonds. Last year, it is estimated that it traded in US$ 40 billion of “a girl’s best friend”. Undoubtedly, the local industry has obviously benefited from its location, as a transport and logistics hub, and the fact that trade is largely tax free.

One place where you can buy diamonds is Dubai Mall which last year attracted more than 54 million visitors to become the most visited shopping and leisure outlet in the universe surpassing the likes of New York’s Times Square (39 million), and Niagara Falls (22 million). Not a bad effort for an emirate with a population which in December 2011 finally topped 2 million.

On the financial side, Lloyds TSB’s 35-year association with the area finally came to an end with HSBC agreeing to buy their consumer and corporate banking businesses for an estimated US$ 800 million. (One can only wish that customer service improves!) This comes after the sale of RBS’s retail banking business to ADCB in 2010. Both British banks had received massive UK government aid during the banking crisis.

Also this week, the Dubai Financial Market saw an almost 3% rise from 1648 to 1687 and continues to show a healthy 26% hike for the calendar year when it opened at 1341.

The Eurozone problems are far from over. Greece government bond yields are still at a staggering 21% whilst Portugal (11.13%) and Hungary (9.06%) are causing increased concern.  The immediate problem has moved to Spain where unemployment rates of 25% and a severe government austerity package will lead to increased social unrest and economic malaise. It may well be that this economic crisis will become the catalyst for a summer of discontent throughout many parts of Europe.

Every week it seems that the UN continues its dithering in trying to bring some sort of peace to Syria. Their efforts, to date, have apparently failed miserably with the result that the situation there continues to deteriorate by the day.

Sanctions are beginning to take effect in Iran but for the region to prosper there has to be a permanent settlement encompassing all stakeholders.

All three of these problem areas could have a negative impact on the Dubai economy with trade being hit, inbound investment falling, tourist numbers dropping and less people flying. Unfortunately, there is not much the emirate can do in these circumstances.