Dubai, the place where the Rich goes to flaunt their riches. The place of paradise and luxury. The place of man-made buildings and attractions of extreme beauty, elegance, and delicate craftsmanship . The place famously known for being problematic as their source of labor are reported to be enslaved South Asians, forced to construct these monumental projects with little to nothing in return. The place where it is also reported to be currently drowning in debt. Yes, the tourist conglomerate that is Dubai, is drowning in approximately 60 Billion US Dollars according to CCTV.com. To be more specific, the main driving force behind Dubai’s economy is Dubai World, which is reported t be shouldering the burden of being 60 billion US dollars in debt.
How can a powerhouse like Dubai be in so much debt?
For one, it is reported that there seems to be an over development of luxury projects. Because of this, there has not been enough revenue from tourists to keep with the payments and demands of such projects.
Another reason is that Dubai’s economy seems to rely too heavily on foreign money from tourist attractions. Since there has not been enough tourists come into Dubai, they seem to be losing with their main source of revenue.
How does this impact the global economy?
Places such as China and Europe have not reacted to this very well. The Chinese Stock Market reportedly dropped and European bank shares have also been impacted.
Dubai believes that the news is being blown out of proportion as they believe they are no longer in debt.
What does that mean?
It means Dubai is actually working to become debt free. They have plans to restructure approximately 26 billion US dollars in debt. In addition, the neighboring country, Abu Dhabi, has given Dubai 10 billion US Dollars. According to BBC, the reason why Abu Dhabi stepped in is unknown and mere speculation at this point.
Dubai expects to have payed their debt in full in about five to eight years time.