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IN DUBAI GOOD TIMES STILL ROLL, BUT NOT SO FAST
September 19, 2008 1:40 PM
By Lara Setrakian, ABC News Digital Reporter, UAE
The crisis on Wall Street has had its impact on Gulf Arab economies. In the words of Arabian Business magazine, “the oil-fueled feeling of economic invincibility has been shaken…in its place is a new mood of caution.”
This region has gotten used to double-digit economic growth, fueled by billions in daily revenue from record-high oil prices. But by the end of this week, all of the stock exchanges except one – Kuwait's -- were down. Literally billions of dollars in value were wiped out.
We’re seeing an outflow of capital, with foreign direct investment leaving these economies because it’s needed elsewhere. In the opposite direction, there’s an influx of people. Dubai, Doha, and Abu Dhabi are being flooded by resumes. Bankers from Wall Street and Europe -- call them high-end economic refugees – are looking for jobs here in the Gulf. This is still a growth region, and that’s harder to come by given the global economic forecast.
Having less capital and less oil revenue could dent the famous building boom throughout the region. Here in Dubai, the past few years have seen the advent of mega-projects like the “The World” (manmade islands in the shape of the global map) and the Burj Dubai (currently the world’s tallest free-standing structure). With the downturn there’s a fear that the real estate market as a whole could be vulnerable –the buildings going up could lead to an oversupply that floods the market.
With debt financing harder to come by, the global credit crunch hampers the Gulf’s eco nomic boom. But there’s a flip side to that – some say that slowing down what may be overheating economies isn’t a bad thing. A slowing of new projects could help ease inflation and lower the cost of raw materials.
Zoom out and it’s clear the Gulf economies aren’t really hurting. The region is expecting more than $5 trillion dollars in revenue between now and 2020, according to a McKinsey & Company calculation. With that the flashy spending is likely here to stay (Dubai opens the world’s largest shopping within a month, while Abu Dhabi launches its first F1 Grand Prix next year). Out here it’s still “let the good times roll” – they’re just rolling less fast and furious with the global economic downturn.
September 19, 2008 in Lara Setrakian | Permalink | User Comments (3)
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No Jews allow
Posted by: steve | Sep 19, 2008 3:36:27 PM
I wish there was a way I could invent a way to make cars run on air. We have given FAR too much to these oil rich countries in the middle east!
Posted by: Juan | Sep 19, 2008 7:26:23 PM
100 years ago this region was living in tents riding camels. 50 years from now, they will be back to doing it again, except for maybe Dubai if they can really diversify. Otherwise, it will the most amazing ghost town in the history of the world.
Posted by: Justin K. | Sep 19, 2008 8:46:45 PM
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