Effects of 2008 Global Crisis on Gulf Region Research Paper

Effects of 2008 Global Crisis on Gulf Region - Research Paper Example A real decline in the demand for bank credit contraction and goods was also triggered by the financial crisis. The prices for raw materials have drastically fell, especially oil prices that within a few months had lost more than two-thirds of their initial value. As an aftermath to the oil prices speculation, in the last three months of the year 2008, the rates decreased to less than 40 dollars a barrel, after having risen at the beginning of the year from 90 dollars to 148 dollars a barrel (Claessens, Kose, Laeven & Valencia, 2013).The Golf real estate market has heavily been impacted by the global economic crisis causing considerable decline in real estate rents and capital value. The price of average residential sales, in Dubai fell by 42 percent since the last quarter of 2008, while rental residential rates dropped on an average of 20-40 percent. The impact of the crisis in Abu Dhabi was less acute as the decline in residential real estate value was estimated to be around 20 perc ent. Rentals for new constructed office space in Qatar decreased by 10-15 percent during the 2008 first quarter. Due to the greater uncertainty over the future and lack of funding residential real estate, sales have collapsed (Hvidt, 2013).It will therefore be hard for many countries in the area to continue with their initial planned or initiated ambitious development programs that were planned in the last five years of prosperity. In order to avoid current account deficits or budget deficits, most governments in the region.