Name: Instructor: Course: Date: Effects of the 2008 financial crisis on the investment in the Gulf area especially in Qatar The global financial crisis affected the whole world though the impact has been severe in the Arab Countries. This comes as a surprise to many, considering that the Arab countries are rich in oil reserves…
The initial impact of the financial crisis was felt partly in some Arab states depending on their participation in the international markets (Qatar 6). Impact on Finance and Economy The 2008 global economic crisis affected the financial markets of countries in the Gulf region. In many states, the stock exchange index declined by nearly 62% in 2008. By 2009, the projected GDP growth rates had fallen from 3.5% to 0.5% (Rocha & Subika 71). In addition, the economic growth decreased by more than 3% in the same year. With the exception of Qatar and Yemen, most states in the gulf area have projected lower GDP growth rates. The cornerstone of Qatar’s’ economy is petroleum. Most of the government revenue, export earnings, and GDP are derived from oil reserves and gas exports. Qatar is the third producer and exporter of oil in the world making it the richest country in the world (Rocha & Subika 71). Effects on banking The banking sector in Qatar escaped the impact of the financial crisis. Most banks all over the world lost their role as creditors and financiers because of the crisis. Banks in Qatar posted big profits in the Gulf Cooperation Council markets in 2009 despite the financial crisis (Sheng 45). ...
Qatar’s Central Bank has taken measures particularly in the real estate sector. Qatari Central Bank issues instructions on buying of shares and financing of real estate projects. Decisions of lowering interest rates, enhancing the compulsory reserve ratios and other key issues in management of banks have been properly addressed in accordance with market mechanism. Qatar’s monetary policy is risk free due to the sound policies implemented to attract foreign markets (Rocha & Subika 65). Economic growth and Employment Before the financial crisis, the gulf region had numerous job opportunities in the world. The financial crisis led to a decline in job opportunities in the gulf area. Total employment decreased greatly. Research shows that the percentage of women seeking employment also increased in the region due to the effects of the financial crisis that caused slow economic growth, inflation, and economic meltdown. Agriculture and manufacturing that were once the main sources of employment are now less competitive because of the export of goods to the global markets. It is difficult for women and girls to find jobs that are considered gender appropriate (Sheng 34). The financial crisis led to a decline in labour productivity in the non-oil sectors in the Gulf region and especially in Qatar. An expectation of future pick up in labour has led to hoarding resulting and reduced productivity of labor. Recent conducted analysis shows that the working age and gender have a great impact on the labour force. The global crisis has led to a reduction in migrant remittances. Migrants are important because they contribute to the labor force in the ...
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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 growth in private credit stagnated while high-risk aversion by the financial institutions coupled by decline in investor confidence stifled credit growth in the economy (Casa, 2009). The real growth in the non-oil economic activities declined by about 5 percent in 2009 and the oil sector saw a significant decline in investments due to slowdown in global oil demand and significant decline in the global oil prices (Distr, 2009).
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 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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