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). ...
The financial crisis triggered steep fall in asset prices and widened the credit default swap (CDS) spreads on sovereign debt. In this case, the Qatar government debt remained elevated thus reflecting the high-leveraged government entities. Fall in stock market prices According to Monetary Fund (AMF), of 2008 financial crisis led to a drastic fall in stock investments by half in the first year and further by additional 25% in the subsequent quarter. The loss in Arab stock market translated to significant decline in the level of investor confidence and decline in the overall investment activities in the economy (Distr, 2009). The Doha Securities market experienced a decline in the level of trading activities and the market’s main index declined by 28 percent to 6886 points. The gulf region countries recorded significant escalation in construction properties before the crisis, but the crisis led to slowdown of construction boom due to tight credit conditions in the countries. The high house rents before the crisis made Qatar citizens to increase their economic contributions towards excessive crediting allocation on such departments. After the decline in oil prices, the construction boom slowed down and housing prices deflated thus leading to significant losses in the real estate sector (Distr, 2009). Decline in tourism financial returns The 2008 financial crisis also led to considerable decline in tourism returns in Qatar. This is evidenced by significant reduction in business tourism arrivals and investors from European countries and North America (Casa, 2009). Qatar immigrants in western countries reduced or completely stopped the foreign remittances to their home country. Furthermore, the crisis also ...
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The country is only 11,586 square kilometers and is home to just under 900 thousand inhabitants, making it one of the smallest countries in the region. Yet, it is regarded as one of the richest Gulf States; for, it has the second highest per capita income and showed the world’s highest economic growth rate in 20101.
The financial crisis refers to the situation in the financial economy, when the value of the assets and institutions goes on losing their value at an increasing rate all over the world. The study is also concentrated on the genesis of the 2008 financial crisis which involves the disastrous circumstances that occurred in the United States as well as in other parts of the world.
The world economy is currently at its worst with most countries hit by the pinching global recession. Economists define financial crisis as a significant downturn in activity that affects all the economic segment, the decline in activity normally last for a certain period, which could be more than months or years.
Changes in corporate governance
Besides corporate governance, management of the culture and language used for communication within the organization plays a very important role in the success of the institutions in the long run (Solomon, 2007). After the banking industry faced the effects of financial crisis, several research works were made on the influence of language and culture of the organizations.
With reference to the major influencing factors of the global financial recession, the report also aims to critically assess the implication of the financial crisis in Qatar and other associated GCC countries. Additionally, the report also demonstrates the major tools that led the countries to evade the drastic impact of the global financial crisis during the period 2007-2009.
The reasons that had led to the Recession have been discussed in details. The key reason for the crisis was the bursting of the housing bubble in the United States. The empirical data and analysis of the factors that had led to the crisis has been covered.
The global financial crisis rapidly resulted in the failure of world stock markets and subsequently the collapse large financial institutions. Countries with economic insecurity were largely affected since they could not effectively initiate various monetary tools.
The general perception is that these oil reserves cushion the Arab countries during the global crisis. These perceptions are obscure since the Gulf region has extremely rich and extremely poor countries. Different countries in the Gulf region have different economic, demographic, and political features.
The author states that direct financing in the region has been affected by the crisis, irrespective of whether it is by foreign banks with limited credit lines that have become more adamant towards lending. The effects even extend to the real estate markets, which has resulted to a lack of slowdown and liquidity in real estate development.
This law regulates the investment of capital in economic activities in Qatar and gives clear cut terms and conditions for foreign entities so that there is no ambiguity in investments. Apart from the law, there are also
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