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work in Dubai y 62% of Indians working there are keralites y last years fall in oil prices had brought down investments. y present crisis have shaken the markets across the globe.INTRODUCTION y A large number of Indian workers. .
y Dubai is one of seven highly autonomous statelets that make up the United Arab Emirates and the UAE's two biggest markets tumbled for a second straight day.57 percent following an 8 percent slide a day earlier.61 percent on Tuesday after plunging 7. y The Dubai Financial Market sank 5.3 percent on Monday and neighboring Abu Dhabi's bourse closed down 3. .
the oil-rich neighbor that serves as the seat of the UAE's federal government. Dubai lacks oil wealth.y Analysts say the crisis is symptomatic of a broader malaise in Dubai y Unlike Abu Dhabi. . and its propensity to spend big using the cheap credit available over the past few years. means it has leveraged itself to the hilt.
malls complete with indoor ski slopes and the world's tallest tower. .REASONS y For the past decade. y Such holdings. Dubai has promoted itself as a freewheeling boomtown. helped both Dubai World and Dubai build up a combined debt-load of about $100 billion. along with a massive push in infrastructure development. racking up debt as it built extravagant artificial residential islands. y They also promoted .
Any default by Dubai World will put these banks. in a tight spot. around the globe have lent around $40 billion to Dubai World. which are yet to recover fully from the recent global crisis. mainly European banks.y Dubai suffered the world s steepest property slump in the global credit crisis as home prices fell 50 per cent from their 2008 peak y Lenders. .
It stoked fears that despite the start of a global economic recovery. at a time when they are starting to emerge from the global financial crisis. a default by Dubai World could hammer international and Emirati banks that loaned the company money.INFLUENCE ON GLOBAL ECONOMY y There were also concerns in international markets that. some governments . y in developing country could still run into problems paying their debts.
y Unless rigorous growth is restored in ample measure the burden on the tax payer or the stress on public services including health care and the pressure on the prices may be note worthy. y Asia s stock market trumbled y Banks may face huge crisis y Crude oil fell more than 6 % .
y Some construction workers are likely to lose their jobs in Dubai. y India has got significant exposure to Dubai through exports and imports.INFLUENCE ON INDIAN ECONOMY y A large number of Indian workers work in Dubai. . y NRIs from the gulf region account for nearly 25% of the total inflow of remittances.
. must find a way to climb out of its financial hole while retaining credibility as an international investment haven. it looks as though the risk of contagion has so far been minimized. y With the UAE central bank providing support. and by extension the United Arab Emirates.SOLUTION y Now Dubai.
but one certainly is consumer confidence.ideological and theoretical foundations of a market economy y There are many things that drive an economy. y One advocates rethink .two approaches to new normalcy. If people have a belief in future success they will invest their time.rethink of the fundamental.broadly speaking. energy and capital in ways that will restore the economy to a growth path.y There are . .
y There has of course been plenty of blame apportioned to various different things. De-regulation of the financial markets.It is important for banks because if there was a sudden decline in deposits. so called non-traditional investments within the banking sector and of course the United States outright. .This refers to the ability of an asset to be converted to cash. banks acting recklessly and gambling with peoples money.CONCLUSION y The financial crisis has been one of liquidity. they need to have cash on hand to cover their reserves. sub-prime mortgage companies whose clients defaulted because they couldn't keep up with repayments.