HH Sheikh Mohammed bin Rashid Al Maktoum started the week off well with a bullish speech about the state of the Dubai economy which appears to have gotten over its problems following the GFC. He contrasted the local economy with all the troubles emanating from the eurozone crisis, flagging global growth and other economic ailments affecting many other countries.

This confidence resonated around the emirate and the mood further improved  as many of the larger companies announced impressive Q2 results with Emaar, Nakheel, Du and Union Properties all coming in above analysts’ estimates.

The turnaround in the real estate sector is highlighted by the progress made by Emaar Properties and Nakheel. The former announced H1 revenue in excess of US$ 1 billion with net profit of US$ 332 million, being 45% higher than this time last year. Meanwhile Nakheel reported H1 revenue up a staggering 112% to US$ 850 million whilst there was a 36.5% increase in half yearly net profit to US$ 210 million.

Du’s Q2 revenue rose 13% to US$ 680 million whilst there was a 57% leap in net profit to nearly US$ 90 million. The company is catching up with its only other rival, Etisalat, and its 5.7 million mobile subscribers represent 46.5% of the total market.

Union Properties has seen a US$ 165 million turnaround in its fortunes from a US$ 142 million loss in Q2 2011 to a current quarterly profit of US$ 23 million. The market is obviously happy with the company’s recent progress as its shares are up over 45% this year.

Dubai Islamic Bank saw a 27% increase in its quarterly net profit to US$ 85 million with an H1 profit of over US$ 150 million. At 30 June, its total assets stood at US$ 25.5 billion with customers’ deposits at US$ 18.5 billion.

Even the Dubai International Financial Centre is getting in on the act announcing that, in 2011, its value of business reached over US$ 3.1 billion and the number of businesses operating increased to over 800. The outlook this year is for improved results and, having been responsible for 3% of Dubai’s growth and 1.4% of the UAE’s non-oil GDP in 2011, it hopes to add even more to the economy this year.

Finally and despite the global downturn, DP World bucked the trend by reporting a 7.5% increase (or 28.2 million TEUs – twenty foot equivalent units) in the volume of containers it handled in H1. The company, with sixty terminals globally, saw the largest growth (12%) in the Far East and the lowest (3.2%) in Europe. Its flagship base, Jebel Ali, handled 6.6 million TEUs – a 7.3% rise over the same period last year. No wonder that Dubai’s recovery was reflected in the latest figures showing a 13.3% rise in H1 exports and re-exports to US$ 37 billion.

Even the local bourse is getting in on the act with the DFM posting a weekly gain of 41 points ending at 1551 and almost 15% up since 01 January.

The feel good factor, resulting from these corporate financial results, was further enhanced by Dubai hotels recording June increases in profit. There was a 50% increase in gross operating profit per available room to US$ 86 and a 10% increase in revenue per available room to US$ 148. These impressive returns are expected to continue for the rest of the year. Interestingly a report on GCC completed construction projects expects that the hotel and hospitality sector will see their project values triple this year to US$ 7.3 billion!

The sector will receive an unexpected boost with Dubai hosting the XVII Annual World Investment Conference in September, being held for the first time in the MENEASA region. Over 500 attendees, representing 250 investment promotion agencies and from over 150 countries, will surely bring smiles to both the hospitality and retails sectors.

One country whose hospitality industry may be hurting (mainly from its ridiculously high exchange rate) is Australia but it may benefit in other areas from two UAE sources. The first was the signing of a nuclear cooperation agreement with a 15 year contract to supply uranium for the UAE’s new atomic power plant. The other news was that the loss-making Qantas Airways confirmed that it was in negotiations with Emirates Airline about a future alliance. No doubt a code sharing arrangement with the world’s largest long-haul carrier will add business and save costs for the world’s second oldest airline.

Emirates hub, Dubai International Airport, witnessed a massive 13.7% H1 increase in traffic to 28 million passengers and a 2.2% rise in cargo to 1.09 million tons. The 4.7 million passengers using the airport in June was 16% up on last year. The airport’s capacity will increase to over 75 million when the new Concourse 3 opens in Q1 2013. The ground facilities will be able to cope with increased demand but what about the air space?

As the international sanctions imposed on Iran begin to bite, its currency has fallen over 30% this year and its trade is grinding to a halt. Consequently, Iranian investment in Dubai reality has fallen 25% in H1 to US$ 410 million from last year’s figure of US$ 520 million. It is reported that the devaluation in the rial has left Dubai traders being owed nearly US$ 300 million by Iranian buyers.

As the eurozone crisis is now in its fourth year, the chances of an effective solution recede by the day as the so-called decision makers dither from one meeting to another. Recent data indicates that the 88.2% ratio of government debt to GDP in the seventeen beleaguered countries is now at historical highs.

The financial markets have seen the writing on the wall for some time and are now turning on Spain, the world’s number 12 economy.  As the country wallows in its third quarter of recession, with no end in sight, unemployment at 25%, youth unemployment at 50%, regional governments declaring bankruptcy and a 10 year bond rate hovering around the 7% level, it will have to join Greece , Ireland and Portugal in seeking a financial bailout.

More disturbing is the fact that depositors are losing confidence and have already withdrawn US$ 200 billion (equating to 16% of the country’s GDP) from Spanish banks in the first five months of the year.

Can it be long before countries like Spain start asking Should I Stay or Should I Go from the eurozone?