IMPACT OF ECONOMIC RECESSION

Impact of Economic Recession



Impact of Economic Recession on the Tourist Industry of the UAE

Introduction

The economic crisis has found to be the turning point for all over the world. The economic recession in the United States of America and the United Kingdom impacted the entire world which even caused the countries to change their economic strategies. The Gulf countries had to face the significant collapse in the crude oil prices as the oil is the core resource of revenue of the UAE and comes at the third rank in the Organization of Petroleum Exporting Countries (OPEC). Other economic linkages have also been impacted by the global recession which goes beyond the fluctuation in oil prices in UAE. Hence, the global recession hit the economy of UAE through numerous distinct channels which include the financial markets, crude oil market, remittance income of the labors, and most importantly the tourism sector. The shockwave of overwhelming recession heavily impacted the consumption patterns of the people where they have become cautious about their additional spending and they are more likely to reserve the money for the hard times.

The recession caused the people to wary about their spending on the leisure and recreational activities including the travel and tourism. Hence, investing on leisure travelling seems to be the non-essential expense during the times of recession. The countries of UAE are primarily based on the tourism as an important source of revenue due to its beauty and reclamation of the sea areas into the islands. However, the global recession caused to reduce the number of foreign tourists in the UAE (Habibi, 2009). Hence, the tourism industry involves in attracting people from all around the world and therefore, the industry is engaged in tourism development and attraction in the country. This may also cover the hotel and food industry, transport, infrastructure development, and construction industry. the tourism industry of UAE is primarily engaged in attracting the people to the nightlife of UAE, mesmerizing beaches, luxurious accommodations, and countless shopping spree (Middle East Business Reviews, 2007). In short, this paper reviews the impact of the global financial crisis on the tourism industry of United Arab Emirates.

Discussion

The economy of Arab countries has been continuously moving towards the expansion due to its tourism industry especially Dubai is considered as the power house for the world tourism. The gross domestic product of emirates moves with the constant rate of 4.1 per cent for a long time but it faced the decline during the peak period of financial crisis between 2011 to 2012 where the growth percentage reached to 3.4 per cent. The chief engine of the economic growth of United Arab Emirates is found to be tourism as it is considered as the global hub that attracts more tourists around the world which consequently improves the performance of the local economy (Department of Tourism and Commerce Marketing, 2012). However, millions of Dirhams have been invested in the attraction projects of Dubai in order to make it more ...