Financial Crisis in Dubai: Reasons and Effects

Pages: 5 (1610 words) Published: March 29, 2010 FINANCIAL CRISIS IN DUBAI-REASONS AND EFFECTS
Dubai-economic position
That is Dubai-sky piercing towers, rotating buildings, spectacular architectural designs,flow of petro-dollers,broad and clean road notworks, etc,etc.Businessmen, investers, and lusury-seekers, used to visit Dubai with all zeal. Some weeks ago, Dubai had issued to international investers, bonds worth $1.9trillion,whiched sent the message that its economic position is unshakable! But now that foundation has shaken!

inability to rapay loan instalments
All these indicate that Dubai's financial foundation is ...... SHAKING! Reasons
Dubai, unlike other six emirates of UAE is not a country rich with oil resources.This city state is purely a business city wholly depending upon tourism and other businesses.Dubai World, in a haste to attract world enterprenuers started spending more and more on building fine roads, star hotels,etc. Foreign institutional investers also invested much here, especially during the last four years.But, for some reason, may be due to economic crisis mainly, FIIs didnot turn to Dubai for investment..AS a result, real-estate businessin Dubai suddenly collapsed.This made an impact on other businesses also. Effects

Dubai world, has business tie-ups in different countries including India.Thes projects, may be delayed( resulting in cost increase), or dropped, or prolonged. Unemployment problem may arise in Dubai. Enterprises may have to retrench a portion of their employees.!0 lakh Indians are working in Dubai and other UAE countries. Foreign Institutional investers, who have business ties with Dubai World, may face loss.70 financial institutions have lent credits to Dubai world. Banks in Duabi may face crisis.

When the world is recovering from last year's economic recession, this may push it back to same position. Ray of hope.
Inspite of all these, experts hope that it is possible to recover.It comes out of past experience. Dubai had faced similar economic crisis in 1999.Then Abudhabhi, another emirette in UAE, had helped Dubai by lending a loan of $1,00,000.Abudhabhi is a financially stable country..It can help. But the quantum of need this time is muchmore than it was in 1999.Just on 29th,November,Abudhabhi has announced that it would concider the financing aspect,item wise, taking each main transaction on merits.It has also clarified,it is not going to take full responsibility of all loans. • Top ten financial institutions of the world

By greater optimism and assurances by America, major part of the world succumbed to globalization and WTC agreements. American companies, for their profit, encouraged the buying habits of people in the globe,... • Finance and gold stock

The economic powers in the world were amazed last week when India purchased 200 tonnes of gold from International monetary fund(IMF).This purchase needed an investment of Rs.35,000 crores.India also announced... ABU DHABI, Dec. 2 (Xinhua) -- The financial crisis sweeping the world that emerged from Wall Street has taken its toll on the United Arab Emirates (UAE), sending the Gulf oil producing country's economy into an uncertain path. In the first half of 2008, the world saw a steady rise in oil prices, which climbed to a record high of 147.27 U.S. dollars a barrel on July 11. However, the soaring oil prices did not get a firm footing since then, with the supply and demand factors remained in a balance, as top officials of the oil cartel Organization of Petroleum Exporting Countries (OPEC) had said repeatedly. After the speculative factors gave way to the fundamentals in the market, oil prices began a journey of correction, declining below 60 dollars a barrel, which represented a drop of more than 60 percent compared with the peak in July. The decline of oil prices was no good news for the UAE, for the oil sector accounted for about 35.9 percent...
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