There are three main reasons for the Dubai crisis:
First, the real estate is overexploited, which is also the main reason. Dubai is full of stunning buildings, such as the Sailing Hotel, Atlantis Hotel, Revolving Skyscraper, Burj Dubai, Palm Island and so on. In the past four years, Dubai has invested more than $300 billion in the real estate industry. But these buildings can't bring short-term benefits, because most of them are still under construction. Therefore, the huge loan cannot be paid off for the time being.
Second, Dubai has invested heavily in the international financial industry, but its investment losses are serious. For example, in 2007, "Dubai World" spent $565,438+billion to acquire nearly 10% of the shares of American entertainment giant MGM. But later, MGM's share price once fell from $84 at that time to 16.8. In addition, other investment companies in Dubai spent nearly $3 billion to buy shares of Deutsche Bank and Standard Chartered Bank, but the share prices of these two banks have also shrunk dramatically.
Third, the policy of pegging Dubai's currency to the US dollar aggravated the crisis. From last year to this year, the depreciation of the dollar led to soaring prices in Dubai and the Gulf region, and the inflation rate reached double digits for several months in a row. The depreciation of the dollar triggered the economic recession in Dubai, and to some extent, it served as an "accomplice" to the debt crisis.