From Europe to Australia, Asia to America, the people from each and every part of world currently are facing the dramatic collapse in the global financial market. The Investment market, the corporate world, the commercial banking sectors or the tourism industries are not the only sectors greatly suffering through this biggest traumatizing threat. The shattering effects of this Financial Meltdown are felt at consumers, the driving force of Economy. Known more commonly as 'The Deep Recession - 2008/09' or 'The Great Recession - 2008/09', this market crisis has emerged as the most recent as well as captivating challenge not only for the Economists but also for the corporate bosses. (The Age of Deflation, 2010)
Recession is qualitatively the downturns of the GDPs of the nations around the globe. One of the commonly accepted definitions of Recession is that it is the situation where the GNPs of the nations have gone down for more than two consecutive financial quarters while the other definition goes like the periods where the GDPs of nations for a year experience a decrease of more than 3% and so on. The situation aroused from the collapsing of some of the large US banks and financial institutions in late 2007. But it has hit every street and corner across the globe. Business confidence is degrading. Commercial as well as the Investment bankers are fleeing. (Recession in UAE)
As far as present conditions are concerned in comparison to previous few years or decades one can say that it's very correct that the present slowdown is one of the worse which industrialized mankind had ever faced.
Now making a more explicit explanation regarding recession in UAE, one of the crucial ways in which this financial demon hurt the economy is a great hit to tourism. People travel less in recession and 17 - 22 % of GDP in UAE is based on tourism. UAE has few biggest and most expensive hotels on globe and thus great connection with tourism industry. The impact of recession on hotel industry can be understood by the closing of Burj Khalifa during financial dip.
Oil and gas industry was another setback to the economy. During recession, the country's overall export of oil deduced to great percentages which further reduced the GDP. (Khawaja, 2009)
UAE is a rich place and many of the peoples used to work here from rest of the world. With such reduction in liquidity in the nation and reduction in economic capitalization, the number of jobs in the country decreased to great folds. The World Bank estimated that the amount of income shipped back home by workers abroad (remittances) fell down by more than 7 percent in 2009 across the Mideast and Arab north Africa. According to some survey among 250 companies it was found that only 37 % of them want to hire during recession and hence, great job cuts.
So in UAE during recession, jobs are cutting, salaries are lowering, and pillars of capital industry are losing hope but it's not a curse rather a lesson for promoters of blind industrialization. Agencies, leaders of capital empires and developed economies share the responsibility to overcome this threat. As this time has provided an opportunity for lot of aspirants too, referring it as a demon is a matter of perspective. (Will the UAE get hit by the global recession, 2010)
Surveys and the reports produced by the World Bank state that this crisis is likely to affect the developing countries the most. The economic growth of the countries depends on the trade. But the world trade is expected to fall at the fastest rate during this period. The bank has also estimated a necessary repay of approximately 3 trillion dollars in public and private loans in developing nations.
Some of the severe outcomes of this threatening situation felt in UAE are:
Another finding is with the real estate of the country. Real estate activities are greatly affected by this crisis as clearly shown from low loan growth. It is mainly result of worldwide spread financial crises as according to the leading policymakers of the Middle East. UAE is the world's biggest oil producing and exporting region is clearly suffering from the global problems that put brake on a regional financial boom which is also supported by 6 years of high oil prices. Sultan Nasser al-Suweidi, the governor of the central bank, in a meeting near Fujairah said "The deceleration will be forced on us...contractions will be seen in everything, but I think that we will continue to grow in each and every direction in a pleasant way." This views matches with that of Emaar Properties' chairman Mr. Mohamed Alabbar who estimated that due to global crises, the real estate in Dubai can suffer a downfall of about 10-13%. "Growth of all these sectors are aggressive and are therefore responsible for the real demand", Alabbar who is one of the members of Dubai Executive Council, told in his interaction with daily 'Emirates Business'. "The domestic demand for the real estate is continuing to surpass supply and it will continue to do so for quite a lot of years."
Recession has major impact on real world issues. This part of the report will illustrate the key significance of recession on real world issues:
The Age of Deflation. (n.d.). Retrieved on May 20, 2010 form http://www.timesonline.co.uk/tol/comment/leading_article/article5748227.ece
Recession in UAE. (n.d.). Retrieved on May 20, 2010 from http://www.indoocean.com/recession-looming-at-recession-proof-economies-a-uae-perspective/
Idrees Khawaja. (2009). "Social impact of the global recession on Pakistan". 3rd China-ASEAN Forum on Social Development and Poverty Reduction. Volume 1. Pp 11
How hard will UAE's economic growth be hit by Global Recession?. Retrieved on May 20, 2010 form http://www.gowealthy.com/gowealthy/wcms/en/home/real-estate/property digest/january09/How-hard-will-UAEs-economic-gr-1231310412561.html
Will the UAE get hit by the global recession. (n.d.). Retrieved on May 20, 2010 form http://www.uaelists.com/index.php/20081206283/Latest/will-the-uae-get-hit-by-the-global-recession.html
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