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the effects of the 2008 financial crisis on the investment in the Gulf area specially on Qatar. - Research Paper Example
Finance & Accounting
Pages 4 (1004 words)
The effects of the 2008 financial crisis on the investment in the Gulf area especially Qatar Name: University: The effects of the 2008 financial crisis on the investment in the Gulf area-Qatar Introduction The 2008 financial crisis negatively affected investments in the Gulf area and especially Qatar…
In this case, the decline in oil prices severely affected the foreign exchange earnings and led to low foreign investment capital inflows in Qatar economy. Qatar and other countries in the gulf area had accumulated vast cash reserves after the oil prices recorded a high of USD 148 per barrel in July 2008 due to a weak US dollars and geopolitical tensions that led to oil speculations (Casa, 2009). However, the last five months of 2008 saw decline in equity market activity and oil demand thus leading to 75 percent loss on the OPEC Reference Basket from USD 148 per barrel to USD 37.72 per barrel before the end of the year (Distr, 2009). Thesis statement: the 2008 financial crisis negatively affected investments in Qatar through tightening of credit, decline in global oil demand and subsequent slowdown of the real estate and stock markets in the economy. Credit crunch Despite the high liquidity level of the main financial institutions in Qatar and decline in interest rates before the onset of the 2008 financial crisis, the availability of credit for investment purposes declined during the financial crisis due to high-risk aversion by the banks (Casa, 2009). ...