Thesis: Effects of Recession on Dubai

Sample Thesis Paper

The GDP dropped by almost 4% in 2009 when oil prices fell and asset prices deflated as a result of credit tightening. The Central Bank and relevant authorities attempted to soften the blow caused by the recession by encouraging liquidity growth in the banking sector. The Dubai real estate market and construction industry in particular experienced a considerable decline in business volumes. Foreign investors become concerned for the solvency that Dubai holds when it was revealed that there was a deficiency of cash in meeting debt obligations (The World Factbook 2010).

It came as no surprise that Dubai chose to take large scale measures to solve its debt problem through a multibillion dollar bond program that was estimated at approximately $20 billion. Dubai had to be supported extensively in order to soften the blow dealt by the recession. Proof of this can be witnessed in the fact that Dubai has to be allotted an additional loan of $10 billion in late 2009 by Abu Dhabi. Efforts were made to further decrease the reliance of GDP growth on oil and gas as well as on a large human capital base.

The recession is not one that has had implications on any specific industry in Dubai. The fact of the matter is that the implications of the recession are multilateral and have affected different industries in the region.

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