A Comprehensive Analysis: Is Dubai on the Brink of Another Recession?

This report analyzes the potential for another recession in Dubai, examining various economic factors and their impact. It begins with an introduction to recessions and their effects, followed by an overview of the Dubai economy and its susceptibility to economic downturns. The report delves into the impact of the global financial crisis and the real estate market crash on Dubai's economy. It further explores the city's plans for Expo 2020, including expenditure and potential benefits, and assesses the government's strategies to overcome economic crises. The literature review covers the decline in property prices and the impact on jobs. The report concludes by discussing the context of the analysis, highlighting the concerns surrounding recession and uncertainty in the current economic climate. The analysis considers the role of Expo 2020 in boosting the economy and attracting foreign investment. The report also examines the government's fiscal policies, including support for social services and the expansionary fiscal policy, and how these might help Dubai overcome an economic downturn.

Running Head: IS DUBAI HEADING FOR ANOTHER RECESSION
IS DUBAI HEADING FOR ANOTHER RECESSION
Name of the Student
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Author Note

1IS DUBAI HEADING FOR ANOTHER RECESSION
Table of Contents
Introduction................................................................................................................................2
Aims and Objectives..................................................................................................................2
Literature Review.......................................................................................................................2
Dubai Economy and Recession..............................................................................................2
Dubai Plans on Expo 2020 Expenditure................................................................................4
Plan to Overcome Recession if Arises...................................................................................5
Context.......................................................................................................................................6
Reference....................................................................................................................................8

2IS DUBAI HEADING FOR ANOTHER RECESSION
Introduction
Recession is massive contraction or slowdown in the economic activities. It occurs
when there is major fall in the expenditure. These slowdown in the activities of economy last
for some of the quarters, resulting in completely hindering economy’s growth. In this
circumstances, indicators of economy, for instance profits of corporate, Gross Domestic
Products, employments and another fall (Al Sudain and Arunprasad 2017). It creates mess in
entire economy. Further, the crunch of global liquidity has resulted into affecting most
countries and among those countries, UAE is the highly affected country. This country was
among growing hubs of business in world with its huge acceptance and development of the
different business and culture. Moreover, economic capital of UAE, Dubai was affected
badly by the recession (Al Kaabi 2014). Therefore, this research paper aims to analyze
whether Dubai is heading for another recession.
Aims and Objectives
This paper aims to analyze that whether country Dubai is heading towards another
recession. Hence, the objective of the paper is to analyze damage done to business and
financial market of country. Moreover, analysis will be on plans of Dubai on expenditure of
Expo 2020. Further, the analysis will be on strategy of UAE for gaining the momentum in
overcoming the economic crisis.
Literature Review
Dubai Economy and Recession
During late 2007, when economy of US was going through the worst recession post
war, the globalized economy faced biggest recession ever that was outcome of trade linkage
and increased global interdependence and globalization. Almost all the major developed
countries economies rapidly shriveled, along with various developing countries, who are

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trade-dependent that includes UAE with the other major countries such as China and India
(Afaneh 2018). It was believed before spread of global recession that only economy of US
will face economic slowdown. However, in reality Europe and other countries such as China
and India were hit badly, along with UAE that is considered as small developing country with
the high ambition (Alawadi 2019). It was then, there was growth in economy of Dubai at the
alarming rate with the projects estimated approx. $660 billion, until it was hit by recession. In
2009, Dubai announced that it will be freezing debt of $26 billion. It was shock to the world,
as after 2 months there was crash of real estate market (Alajoutsijärvi, Juusola and Lamberg,
2014).
Dubai projects the image of prosperity, with highest world’s tower, artificial islands
and grand commercial centers. This country even as city state, races to court the investor to
bolster flagging economy. In the recent years, vital property, trade and tourism sectors have
been weakened, despite boosting most diverse economy in Gulf region. According to data of
government, the deals of real estate plunged 21.5 % to $60.7b in year 2018, while number of
tourists that visits Dubai has been remained stagnant at approx. 16m in past two years
(Alawadi 2014).
The upheavals of global financial markets as well as ensuring global recession have
adversely and severely affected UAE, especially Dubai with its lack of the oil revenues and
high level of the speculative real estate investment. It was also true for rental market that had
made key gains in past years. Hence, the damages that commenced in 2008, after the crash of
property market has still not able to heal itself (Arshad 2016). Dubai posted its greatest loss
in the jobs in 2018, since global financial crisis decade ago, particularly among high-paying
positions, which have helped to turn desert output into city of the gleaming skyscrapers as
well as three million people in just few decades. This downturn reflects the level of stress in
pillars of the economy of Dubai (Alkaabi 2014).

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Chart 1: Decline in Property Price in Dubai
The economic experts in UAE has expressed fear that world economy is heading
towards another recession. It is more than ten years, since there was bubble burst of
American housing and ensuring broke of global financial crisis and the discussions are rife
that next crisis is imminent. The trade and development body of United Nation, UNCTAD
stated in recent report that 2020 recession is no clear and present danger. Some of the surveys
indicated that financial community concerns that such event will likely to happen soon (Axon
and Hewitt 2019).
Dubai Plans on Expo 2020 Expenditure
The Dubai government has adopted three-year budget cycle, which is from 2020-2020
with the total expenditure of around Dh196 billion and with long-term planning objective for
stable economy. Expo 2020 Dubai will be focusing to provide easier access to innovation,
markets and innovation by working on the technologies and solutions, which facilitates
movement of ideas, goods and people (Hoggarth 2016). According to released 2020 budget,

5IS DUBAI HEADING FOR ANOTHER RECESSION
Dubai expects for substantially increase spending of state for stipulating economy of emirates
and supports the world fair of Expo 2020. The government of Dubai has announced 3 percent
reserve of the total expected expenditures in year 2020 for supporting the objective to make
huge success of Expo 2020 (Cannon, Hillebrandt and Lansley 2016).
Expo 2020 Dubai is expected to include important contribution to non-oil-based
Dubai economy as well as wider UAE. Further, precise impact of the Expo 2020 Dubai is
hard to predict, but there is somewhat doubt that it is event of the key importance to economy
of UAE as a whole. The hosting of Expo Dubai 2020 will be requiring substantial amount of
investments from government of Dubai across ranges of infrastructures as well as related
projects. It has been believed that total expenditure of US$8.7b have to be allocated for the
Expo 2020 Dubai related investments (Sikder, Higgins and Ballis 2017). The authorities of
UAE have predicted windfall of around US$17.7b in event that Expo 2020 Dubai is success.
The large spending of government related with Expo Dubai 2020 will be generating
important commercial opportunities for private sector. Some of the sectors that are expected
to get benefit from Expo 2020 Dubai includes infrastructure & transportation, construction
and real estate, hospitality and tourism, energy demands and enhanced economic
development (Soueid, Spraggon and Bodolica 2017).
Plan to Overcome Recession if Arises
In order to overcome recession, if arises, Dubai is taking numerous decisions to boost
its economy. Dubai continue its support to social services that includes housing, education
and health, as the part of objective to make Dubai as the most livable cities in world (Kassem
and Bhatt 2015). The Department of finance of Dubai Government states that they are keen to
provide the economic incentives with impacts of attracting more of the investments and work
for improving competitive position of emirate and implementing goals of Strategic Plan 2021
and beyond that. The budget for fiscal year 2020, with the total expenditure up to 16.9% in

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comparison to previous year has been approved. It comes as part to support Expo 2020 Dubai
and Dubai Plan 2021 and moving forward for supporting macro economy of emirates (Rose-
Redwood, Sotoudehnia and Tretter 2019).
Dubai is now capable to achieve operating surplus of AED1.96 billion because of
disciplined financial policies adoption that helps in contributing to development of the
infrastructure programmes for emirates and affirms policy of financial sustainability pursued
by emirates (Nicholls 2016). The Dubai government has plans for sending clear message to
community of business that expansionary fiscal policy is pursued by Dubai that will be giving
great confidence to economy of emirates and contributes towards attracting more investments
(Rajan 2014). Further, the growth in hydrocarbon and nonhydrocarbon sectors is helping the
economy of Dubai to improve. The sector of hydrocarbon exhibits significant growth,
especially because of two-digit growth in natural gas and condensates production (Ramos
2016). The oil prices declined by 6.5% during fourth quarter of 2019 and continued reduction
in prices and rent have continued to weigh negatively on UAE inflation. However, pick up in
the growth and employment of non-energy have moderated deflation pace, as CPI declined
by 1.6% in comparison to reduction of 2.1% in previous quarterm (Ratnamala and Spurgeon
2015).
Context
This topic is chosen because these days recession, uncertainty and fear are words of
moment. There are various reasons responsible for this situation. There are various countries
that were hit by recession. In this context, Dubai is chosen for analysis because it has faced
various recessions over period of time and currently, also its economy is heading towards
recession (Masarrat and Jha 2015). Further, expo 2020 affect Dubai financial market because
it is likely to generate approx. US$23 billion the between 2015-2021 as well as will boost
economic growth of Dubai to average 6.4% year from 2014-2016 and potentially towards

7IS DUBAI HEADING FOR ANOTHER RECESSION
10.5% by year 2020. Moreover, it will help in enhancing foreign investment into UAE across
the sectors of economy as the international corporations seeks for maximizing the opportunity
(Narayana and Abraham 2014).

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