The world economy was able to overcome the repercussions of the international financial crisis and also managed to solve many resulting problems in a relatively swift manner.

This helped restore trust in the financial system, by the introduction of protective measures designed to regulate the financial and economic markets in different countries around the world, and gave it new momentum.

The European Union rose above its differences regarding Greece's debt and announced a comprehensive bailout plan to support Greece.

Although Germany — the union's largest economy, rejected the plan at first, it had no other choice but to pass it so as to maintain the strength and status of the euro, which was affected by the crisis.

Restructuring the debt of Dubai World and Nakheel had major positive impacts on GCC stock markets, especially after the scheme was strongly supported by the International Monetary Fund and then welcomed by the business sector.

Capability

Needless to say the UAE economy has the necessary potential and capability to solve the effects of the crisis, including those related to loans and financial obligations.

The remarkable recovery in the economies of developing countries led to an increase in the demand for oil and the optimistic expectations announced by Pascal Lami, Director-General of the World Trade Organisation (WTO) who referred to the possibility of an increase in world trade up to 9.5 per cent this year.

Although the economic recovery has started, road bumps still exist here and there around the world, especially where the international economic crisis had hit the hardest. However, countries around the globe have become more able to face obstacles, especially after the sequence of bankruptcies, job losses and the strong shocks that hit international markets were absorbed.

Since the problems faced by Iceland and Greece were contained due to European and international cooperation and coordination, any other problems that may take place in any part of the world will be controlled. There are positive signs that the global economy is recovering, such as the decline in job losses in the US and Europe.

The economy in the age of globalisation has become largely interwoven and integrated as the activities of the US, European, Gulf, Chinese and other financial institutions cover markets around the world. This means that these markets cannot operate in seclusion of the developments of existing establishments, whether positive or negative, in areas around the globe that attract investment.

That is why Germany was not able to stop the Greece rescue plan. The negative repercussions would have reached all the EU's 27 members, including Germany.

The euro, which dropped nine per cent over the last few months, would be the first to be affected by the negative situation.

Hence, it is impossible to ignore the exposure of an international economy to financial or structural difficulties. Hundreds of financial institutes and banks, especially European financial establishments, offered billions of dollars in loans to Greece. Therefore, if Greece is unable to pay back its debt, the repercussions of the crisis will extend to other members of the EU.

This is exactly what the European leaders tried to avoid in their last summit, where the Greece economy rescue plan was approved.

More importantly, these developments provide rare investment opportunities in various markets around the world. There are successful establishments that are being sold today for reasonable prices; moreover, financial markets, especially Gulf markets, enjoy a promising future.

 

(Dr Mohammad Al Asoomi is a UAE economic expert)