Falling oil prices coupled with global recession will seriously reflect on the economies of oil-dependent nations as development plans by these nations were fundamentally designed after the oil prices zoomed continuously until recently. The commercial hub which is tipped to become number one city in the world by 2010, Dubai itself is feeling the heat of global recession. Banks have already begun to implement tighter norms to release money.
Stock markets across the region witnessed new lows since June showing clear signs that neither the Gulf will be immune to a recession. The Emirates’ Central Bank’s gesture by making available $13.6 billion to help the banks which are exposed to the US markets to deal with the credit crunch is an indicator that the Gulf economy wants the US and at large, the global economy to be back on track.
Many prestigious projects across the region will have to be shelved or delayed if the banks show reluctance to lend. Loss of jobs and lowered salaries will make the people in a difficult situation to either obtain a loan or complete the installments of existing borrowings, and harder to get loans mean fewer buyers.
A realtor said until recently clients used to be after him to buy properties but that spirit was not evident today anymore, and he feared what had happened in the US and other parts of the world was likely to happen in the Gulf. Though the Gulf Co-operation Council (GCC) member states have abundant wealth gained from oil prices, the nations will have to face different problems as compared to the US.
In Dubai alone, speculators have borrowed money to pay the deposit amount of 10% to properties which are not even built. A business analyst opined if the banks could identify and lend money to the real users, the markets could maintain the momentum. Consequently, some feel the cooling off will be beneficial to the markets, as speculators will be flushed out, and real takers will get things for reasonable prices in the bargain.
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