Over the boom period, the countries in theMiddle Eastenjoyed increased level of investment in both real estate and other forms of investments across the globe. The fact that they were insulated in terms of revenues from oil was only valid to a certain degree, based on the sustainability of the oil prices and demand.
For this reason, the oil exporters in the region were for sometime immune to the credit crisis that was devastating the rest of globe. However, with reduction in demand for oil on the global market, customers were unable to engage in production while firms had nowhere to sell their products. The demand for oil came crashing and so was the price for oil. However, in spite of the drop in oil prices stimulating demand, the recession has paralyzed the economic mechanisms, leading to huge supply of oil at low prices.
With reduction in returns from investment in the foreign countries, the economies of theMiddle Eastwere sucked into the crisis, leading to failure of the financial and economic systems in the country. Just like in the rest of the world, specifically placed stimulus packages were handed out to enable the financial institutions to handle the drained credit and restore order in the liquidity of the banks.
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