Recession In the West Will The Middle East Be Shielded

Recession In the West Will The Middle East Be Shielded

What is a recession?

A recession is a widespread and prolonged downturn in economic activity. It is generally announced when a country has two consecutive quarters of negative gross domestic product growth. Some economists also measure recessions by looking at nonfarm payrolls, industrial production, and retail sales, among other indicators.

Understanding Recessions

Since the Industrial Revolution, most economies have grown steadily, and economic contractions are an exception. Between 1960 and 2007, there were 122 recessions that affected 21 advanced economies roughly 10% of the time.

What Predicts a Recession?

While there is no single predictor of recession, an inverted yield curve has come before each of the 10 U.S. recessions since 1955; however, not every inverted yield curve period was followed by a recession.

What Causes Recessions?

There are numerous economic theories, which can be categorized as economic, financial, and psychological, that attempt to explain why and how economies go into recession.

More Causes

Unemployment is a significant element of recessions. As demand for goods and services falls, companies lay off staff to cut costs, which in turn must cut their spending, which hurts the demand.

Solutions to Recession

Governments usually respond by increasing the money supply or increasing government spending and decreasing taxation.

Here are seven tips for individuals looking to protect themselves in a recession:

  1. Don’t be afraid of a bear market.
  2. Don’t try to time the market.
  3. Stockpile savings.
  4. Establish a backup to your emergency fund.
  5. Don’t underestimate the power of having bonds in your retirement portfolio.
  6. Get a side gig.

Recession in the Middle East

Speculation runs rampant about the economic crisis in the west, but is it likely to affect the Middle East? There are some factors specific to the region that may suggest otherwise. The Middle East, and the UAE particularly, may be shielded, and here is why:

Recession in the UAE

The local banks in the UAE have limited exposure to the Russian and Ukrainian banks that were affected by the recent conflict. The year 2021 was also a positive year for the country, with GDP up 3.8 % and predicted to reach 5.4% by the end of 2022, so it is well positioned to weather the storm. With a growing sector that provides business setup services, the UAE continues to be a leader in bringing innovative businesses into the country, boosting expertise, and maintaining growth. The UAE is also predicted to outpace all other countries in the region in terms of growth over the next 12 months.

Dubai Property Market Boom

Dubai saw in the first quarter of 2022 a surge in real estate investment to the tune of $4 billion. This increased investment in Dubai is a promising sign that foreign investment is available and that the Emirate can continue diversifying its economy.

This market has been supported through governmental initiatives that make Dubai a great place to invest and live. As a result, the number of people registering an interest in the city’s real estate has increased by three times.

This growing sector that provides business setup services enables Dubai to remain a leader in bringing innovative businesses into the city. You can seek the help of a business setup advisor in Dubai if you want to bring your company to the Emirate. Business setup in Dubai is easy, but such an advisor shall make it easier.

The Role of the Energy Prices

With 30% of the UAE’s GDP being generated from oil, it’s clear that energy prices will play a part in how the country fares in a global crisis. The Ukraine war also plays a significant role in spurring said crisis. The conflict is increasing the cost of living and the price of doing business globally.

While this isn’t necessarily all bad, even though the UAE continues diversifying its economy, it still relies heavily on oil. But recently, OPEC announced a massive reduction in oil production. As a result, an increase in oil prices is inevitable.

At the same time, because fuel sources are limited by the sanctions imposed on Russia, the UAE has inherited a larger market share.

Players in this sector ensure the existence of players that provide business setup services, which makes Dubai a leader in bringing inventive start-ups into the city. You can seek the help of a business setup advisor in Dubai if you want to bring your company to the Emirate. Business setup in Dubai is straightforward, but such an advisor shall make it much more manageable.

The Role of Crypto

One of the great appeals of the crypto sphere is that it is not believed to be significantly influenced by the financial system. The rising cost of energy will play an enormous part in the cost of the crypto-mining process, but this should cause cryptocurrencies to climb in value. Because most of the popular crypto investments are finite by nature, if production costs rise, the value of existing assets should also increase.

The UAE has already proved to become a global hub for crypto, with the digital economy contributing 4.3% of its total GDP. Therefore, the country could see further investment in the crypto infrastructure and experts.

This booming sector is full of players that provide business setup services enabling Dubai to remain a front-runner in producing innovative businesses in the Emirate. You can request the help of a business setup advisor from Axiom Mark if you desire to create your company in UAE. Business setup in UAE is hugely facilitated, but such an advisor shall make it more straightforward.

The Middle East Resisting the Current

Recessions have generally become less frequent in recent years and do not last as long worldwide. In the Middle East and the UAE, the main economic driver, oil, will unexpectedly continue to grant countries in the region the opportunity to thrive and redistribute the proceeds to tourism, real estate, technology, finance, etc.

These sectors are comprised of players offering business setup services enabling the UAE to generate innovative businesses in the Emirates. A growth in tourism income, for instance, can lead to more significant property investment, and greater property investment can, in turn, lead to more business startups, bringing an influx of additional foreign capital and skilled workers. We advise you to seek the help of a business setup advisor in Dubai if you intend to establish your first business in the city. Business setup in Dubai is incredibly simplified; however, such an advisor shall make it more straightforward.