Financial Crisis in Dubai
Financial Crisis in Dubai – Report 1 Dubai is one of seven emirates that make up the United Arab Emirates in the MENA region. In recent years, Dubai has experienced a period of rapid expansion and growth followed by a global economic crisis. This crisis has left Dubai in a situation where extensive implications are necessary in order to secure a positive future outlook. The rapid expansion and growth in Dubai occurred mainly during the economic boom from 2003-2008, in which construction and real estate were major factors of development. This economic strategy differs from the majority of other countries in the region that rely on oil revenues as the foundation of their economic development. The goal of Dubai’s investments, based primarily on tourism and foreign spending, is to establish a more sustainable long term economic plan. Dubai is the first Arab Emirate to allow foreigners to purchase land and so when the worldwide economic dip occurred in 2007-2009, many foreigners fled their countries for Dubai, which at the time, was relatively more stable. Because these foreigners were financially weak from their relative depressions, they had little money to spend on Dubai’s attractions, and the overall income level of Dubai began to drop. These low-income foreigners could not afford the high prices of housing and hotels that were in-place and under construction, and housing prices in Dubai began to decline for the first time ever. As housing prices and housing income fell, many foreign building companies began to put their excessive projects on hold. As building projects fell, the cheap construction labor that was hired began to cancel visas at a rate of nearly 1500 a day, at one point. All of these factors led to heavy losses in national income and a financial crisis that began with their inefficient, top-heavy infrastructure focus and became a large issue with the onset of the global recession of 2007-2010. To understand the present state of Dubai’s
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