Science, Tech & Environment

Middle East feels the pinch

It was inevitable that the Middle East was finally hit by the global financial crisis. Stocks in Dubai fell dramatically this week, and Saudi Arabia, the largest market in the Arab World, lost more than 17%. This Dubai stock worker was calling for divine intervention. Why did it take so long for the financial crisis to hit the Middle East? This analyst says it hasn't really taken so long and the Middle East has been following quite closely the rising cost of debt for borrowers to the Middle East, so the credit crunch has affected the Middle East for some time, but in less obvious ways than in the West. Real estate projects worth $1.3 trillion dollars are in risk of delays or even full out stalls. The problems could get worth. Many of the sovereign wealth funds haven't yet reported on their balance sheets. The amount of remittances from ex-patriots sent home could also drop. Others like Egypt are kept afloat with foreign aid, which is most likely to slow down. This analyst sees a silver lining in the sense that the Middle East will be forced to rethink their financial systems in a way that can generate wealth from within the Arab World and give some kind of protection from the global shocks and enhance economic sovereignty.

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