Global economic recession and the Middle East

[Sal-e]

Any thoughts about the current global credit crisis' affect on our humble existance in the Middle East?
Apparently, some banks are in a lot of trouble with a couple from Kuwait going bankrupt and many more to follow.
What will this do to the much touted expansion plans of the airlines of the GCC with financial institutes possibly limiting their loaning capabilities?
I guess a quick way to find out is to try and withdraw a substantial amount of money from your account.

[.Aero]

At least Iran are offering the world something to chuckle at!!



" We are very happy that America's economy is in jeopardy and they are paying the price for their misdeeds. God is punishing them " (http://news.bbc.co.uk/2/hi/middle_east/7663487.stm)

[geo7E7]

Things have started to grow very slowly here in the mideast. Demands have slowed down tremendously these last couple of weeks and UAE is feeling it. The first to be hit would be the property section. People are taking their money out to minimise their losses and eventually will stop spending. Emirates is anticipating for a very slow pax demand soon....and the results can be quite devastating...with the number of aircrafts and destinations we have.
However, we are very optimistic that being here in UAE is still better off than elsewhere...for the time being.
One thing for sure...the whole global economic crisis WILL affect everybody in the end....!

[.Aero]

The first to be hit would be the property section
According to an Arabian Business poll, 75% of perspective buyers aren't willing to invest in Gulf property at the moment.

Article here (http://www.arabianbusiness.com/533805-75-would-not-invest-in-gulf-real-estate-sector?ln=en).

[shazar]

Central Bank of Emirates issued a warning circular to national and foreign banks operating in Emirates 3 years ago expecting a bubble in real estates and financial sectorsbetween 2008 and 2009, and that all loans and credit facilities must be granted on high risk tolerance. Now expectation is gradually coming by.

Here is a good news clipping in Financial Times about the situation in UAE published 2 days ago http://www.ft.com/cms/s/0/5e67d614-962a-11dd-9dce-000077b07658.html?nclick_check=1 (http://www.ft.com/cms/s/0/5e67d614-962a-11dd-9dce-000077b07658.html?nclick_check=1)


Bahrain indirectly made it clear 4 days ago they will review their financing strategies for the projects, and just today Saudi Arabia finally admitted the global financial storm has affected them. There is a real deep problem.

In connections to salaries in the region, only few sectors are well-paid such as airlines, banking, oil and telecom. Based on HSBC and Hays, the generosity of compensation & benefit system is termed on employer's responsibility than productivity of staff (i.e. fixed bonus system irrespective of profit & loss margin) is one of the reasons behind the current problem affecting financial sector in the Gulf and Dubai in specific. A leading headhunter confirmed to me a week ago that major UAE and Kuwait banks opted to freeze recruitment.

There are more money being spent on building skyscrapers and buying airbus and boeing planes than on developing locals and resolving soaring food prices. When development direction is wrong, the practices make the region follower rather than competitor. Now I wonder who will live in Dubai charming flats if a fall out in real estates market comes by!

Many feels the concern and I hope no poor people get affected.

[411A]

One need only to look back in history, to see the problems.
1983/84 was a thin time in SaudiArabia. The price of oil was at about $9/barrel, and the government operated in the red for two years, approximately.
The social insurance/retirement sceme for expats was canceled by royal decree, road/bridge spending was drasticall cut, many building projects in Jeddah (and elsewhere) were curtailed...and at SVA, pilots contracts were selectively not renewed and even the 13th month salary was not paid in one year.
Look at the present.
A building boom in many middle eastern countries, fueled mainly by high oil prices....now the oil price drops like a falling safe pushed out the fourth floor window, and...well, you fill in the blanks.
Expect it to get far worse before it gets better.

[Wings Of Fury]

My pay check has risen over 30% in the past two weeks after the exchange rate, which is great for me, anyone know why it has shot up like this? I am not one for the financial side of things.

[fractional]

Global economic recession and the Middle EastAs the title suggests, the said recession made its first steps here despite all the zillions these countries have, but where is the money? These zillions aren't here necessarily, and if push comes to shove, the luckier rich will just step outside and continue to enjoy the money they kept while the others struggle. Everything will depend on the American economy's recovery which I believe will turn around quicker than the others'. This fact may help the economies here too, since they very much follow Uncle Sam's.
The direct impact for me and others earning in Euros is just what Wings Of Fury said, being it 15, 20 or 30%. As long as I keep my expenses low and save as much as I can in what I see fit, it'll be always good news.
The housing market will have to come down from the speculative heights in Dubai and eventually in the other Emirates and Gulf wide too. It won't happen so soon (Abu Dhabi) because they have a backlog with the creation of Etihad plus other local developments and the oil price hike lately.
Besides the people, Gulf Nationals or others, who can afford to have 2nd, 3rd, 4th or 5th homes here? Who else is going to buy or rent all this housing other than the tourists, even if they turn out to be 10 million in a year's time spending a maximum of 7 days in a row here?
How many homes are here for the 10 millions visitors (average of a 3 day occupancy rate per couple) and 5.5 million inhabitants? And how many of the 5.5 million can afford to live in the housing projects built since 2003 or 2004?
Note: The number of tourists is an estimate based on figures older than 2008.

[mensaboy]

Wings of Fury,

you state. ''My pay check has risen over 30% in the past two weeks after the exchange rate, which is great for me, anyone know why it has shot up like this? I am not one for the financial side of things.''


That is impossible. Since only 50% of your salary (and might I add BASE salary) is protected when the USD declines, then I have a hard time believing your statement. When the USD increases in value compared to other currencies, which it has been doing (much to my amazement) in the last short time frame, then you do not receive the ERP.

Then again, if your national currency has declined so precipitously, and you are equating your DHS value in those terms, then that is possible. Where are you from? Izlackezban?
Zimbo?

2 weeks and you have received a net increase of 30%? First off, we are paid monthly, so how exactly did you determine that increase?

I wish it were true for you. I wish it were true for all pilots at EK. But sadly that is not the case.

30% increase in two weeks, oh come on !!!

[FlyingCroc]

While inflation goes up and investments in DXB real estate go down! :yuk:

[VARIG737]

I think what he means is that the income, when converted to the home currency, has raised by 30%...sure, you still spend in local currency, but you might save more money by sending it home....for instance: I am originally from Brazil, and the USD for the past year or so was around 1,60 Brazilian reads. In the last month, the USD went up to 2,31 Brazilian reais, so if I managed to save, lets say, 10.000AED.

10.000AED = 2.740USD = 4.380 Brazilian reais last month...
10.000AED = 2.740USD = 6.330 Brazilian reais this month...

So, 44% increase in one month ON MY SAVINGS...not on my salary.
:ok:
Rgds

[FlyingCroc]

If your Brazilian economy goes to the shi...s then you just get more Brazilian currency for your USD, paying for the skyrocketing inflation?

[411A]

When the USD increases in value compared to other currencies, which it has been doing (much to my amazement) in the last short time....


Of course it's to your amazement, as clearly you don't know the first thing about currency valuations/movements.
The US Dollar will always be top dog in the middle east, simply because it remains, dispite some malcontents ideas, the premier worlds currency...and the one nearly all run to, in times of economic uncertainty.:}

[Wings Of Fury]

Mensaboy,

Yes it is true, I don't work for EK, I am based in Kuwait.
1KD = 4.0 AUD (approx a month)
Now 1 KD=5.8 AUD
Amazing times, I just hope it lasts, By the way I am a First Officer. Probably the highest payed First Officer in the world (when transfered to home currency)

If I am lucky enough to join Emirates or Etihad, I would be taking a big pay cut! :eek:

Also I didn't come here for the money, that was just a bonus.