What went wrong in Dubai? Well, Dubai became too overly ambitious! Dubai wanted to be the Hong Kong of Middle East, the financial hub and business capital of the region. Their economic model is however is not sustainable so it failed. Unlike in Hong Kong where most of the developments are done by private firms, Dubai’s high risers, manmade islands and other large scale projects are government funded. The funds used to build those massive projects are loans from the world’s major banking institutions. They never anticipated the economic downturn and it ruined them. The banking institutions are pressured because there’s a possibility that Dubai might default in their loans. They’ve asked money from Qatar and KSA but they were ignored. Its neighboring Emirate Abu Dhabi (AUH) declared that it’s not going to write blank cheques for them anymore.
Dubai will be able to raise the money needed to repay their loans but their image has already been tarnished.
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