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The Effects of the 2008 Financial Crisis on the Investment in the Gulf Area - Essay Example
The paper attempts to explore how the gulf region, with a special emphasis on Qatar has been impacted in their investment programs due to ongoing financial crisis that began in 2008. This amply proves that investment in the aftermath of 2008 financial crisis is shaken but not shelved…
The 2008 financial crisis brought in its wake the reduced inflow of foreign direct investment (FDI) with a measure reduction observed in 2009. As per the Kuwait newspaper, Al-Qabas, as many as 675 real estate projects were cancelled in Gulf countries with almost 75 percent of them belonged to UAE – a large portion being in Dubai. Dubai's real estate market has been highly buoyant since last couple of years and almost 25 percent of its GDP comes through its real estate industry. It is imperative that property market in Dubai has seen its worst fall during the crisis period. In the aftermath of 2008 financial crisis, Oil prices plummeted significantly to reach $40 per barrel by December 2008. The countries under discussion heavily depend upon the income from exports of crude oil and their 50% of GDP, baring UAE, is generated from the oil economy. It is not surprising that fall in oil prices affected significantly the business of oil exporting countries such as Kuwait, Qatar, Oman, Bahrain, UAE causing impact on investment scenarios in these countries.
Impact of 2008 Financial Crisis on Investments in Qatar
It is pertinent to note that the impact of financial crisis on Qatar has not been substantial. During the 2008 financial crisis, the establishment continued to protect the local banking sector through direct investments in them. Ongoing financial Crisis did affect the GDP and investments in 2009 but it made a smart recovery in 2010 due to upward movement in oil prices. Qatar made substantial investments in its gas sector in 2011. The policy makers focused on country's non-associated natural gas reserves and began developing them that provided huge boost to foreign investment in non-energy sectors too. ...