Great Banana trade Dispute

In September the world trade organization ruled that EU banana regime import was inconsistent with WTO for certain reasons. Such as EU Tariff allocation , particularly to the ACP ( African, Caribbean , Pacific , ) countries , was contrary to the non discrimination rule ( General Agreement on Tariffs & Trade ) as well EU’s licensing procedures, which involve the purchase of EU and/or ACP bananas in order to obtain rights to import some Latin American (or other third countries’) bananas, were contrary to the MFN (most-favored-nation) rule and the national treatment rule , at last through the impact of this licensing system on the service suppliers of the complaining countries, the licensing procedures were also contrary to the MFN rule and the national treatment rule– General Agreement on Trade in Services.

In January 1999, the EU introduced a new banana import regime but the WTO ruled in April 1999 that this new regime was also incompatible with the EU’s WTO obligations.

In April 2001, the three governments reached an agreement whereby Ecuador and the US would suspend their sanctions so long as the EU changed its banana import regime from the existing tariff-rate quota system to a tariff-only system by 1 January 2006. Under this new tariff-only system, banana imports would not be subject to quotas; there would be a single tariff for all banana imports, except for ACP bananas which would continue to benefit from a preferential tariff arrangement.

Mudaraba in Islamic Finance

What is Mudaraba in Islamic Finance?

Islamic finance is popularly known for offering interest free loan products. This is in accordance to the Shariah law under which the financial system operates. However, there are also other products offered by the financial institutions. One such product is Mudaraba. This is a joint venture agreement between a bank (investor) and a customer (entrepreneur). However, as opposed to where both would contribute capital, Mudaraba involves one party providing the labour and the other providing the capital. The investor is referred to as rabb-ul-mal whiles the one who takes the managerial and work responsibility is known as mudarib. Since the latter did not provide the capital, everything that he purchases is owned by the former. Mudarib can only make an earning if he manages to sell the goods at a profit. As such, he is not entitled to claiming his share if he has not sold the assets. This is even if they increase in value.

How is mudarabah is done in islamic finance:-

In Mudarabah, rabb-ul-mal starts by specifying the business to be run by mudarib. It is only in this business that he will invest his money. This is what is referred to as al-mudarabah al –muqayyadah or restricted mudarabah. In other cases,rabb-ul-mal may see mudarib make the choice of business. As such, he will invest in any business suggested as fit by mudarib. This form of mudarabah is referred to as al-mudarabah al-mutlaqah or unrestrictedmudarabah. Rabbul- mal can also invest his money in a mudarabah which has more than one mudarib. In simpler terms, he can provide capital to mudarib A and mudarib B where the two will utilize it jointly. When it comes to the share of mudaribin the mudarsabah, it will be divided between A and B. The business is thus run by the two as if it were a partnership. In a mudarabah, mudarib whether he is one or they are two, has the authority of doing anything considered normal in the course of doing business. If they wish to do anything extra to this, they have to seek permission from rabb-ul-mal.

Distribution of profit in mudarabah is usually agreed between the parties; Shariahas not prescribed this. However, the amount given to any of the parties is not supposed to be a lump sum. For example, a 40% to 50% is acceptable compared to a 20% to 80%. They can also agree to share the profit equally. Profit distribution can also vary with situations such as the type of goods traded on or the location of the business. Also, mudaribis not supposed to claim any form of a fee for his work above the agreed share on the profit.

Reference:

Usmani, T. (2002). An Introduction to Islamic Finance. Berlin: Springer.

Islamic finance ( Murabahah, Musawama, and Bai Mu ajjal)

  Murabahah   

The Word Murabahah has been derived from the Arabic Word Ribah which means Profit. It can be denoted as sale with Profit. It is a specific kind of a sale where the seller sells and asset to a buyer at a profit. The profit added is agreed upon by the buyer and the seller. It is therefore the obligation of the seller to disclose to the buyer the amount that he/she purchased the asset so that they can agree upon the profit and the price to sell the asset. This can be Proven from the Quran at: “And Allah has permitted trade” [2:275]. .( "وَأَحَلَّ اللَّھُ الْبَیْعَ وَحَرَّمَ الرِّبَ ا" (البقرة: 27

What is Musawamah and how does it differ from Murabahah?

Musawamah is a kind of a sale where the seller does not disclose the cost of the asset that he/she is selling to the buyer. The seller therefore is under no obligation at all to disclose the buying price for the commodity to the buyer during price negotiations. This happens mostly when it is difficult to determine the cost of the product or when the cost is included in a pool of other products. The major distinction between Murabahah and Musawamah is that the seller does not disclose the initial cost of the asset in question.

What is Bai’ Mu’ajjal (sale on deferred payment basis)? 

This is a type of sales of goods where the bank purchases products on behalf of the buyer. The bank then sells the goods to the buyer at a profit with the option of the buyer to pay for the goods in installments that are agreed upon by the bank. The buyer can also be asked to sign a promissory note but the bill or the note cannot be sold to a third party at a different price from its face value.

Standard Chartered Bank Vs internal problems

Standard Chartered Bank is a public limited company offering banking and financial services in many parts of the world. Some of its products include credit cards, corporate banking, insurance and consumer banking. Others include mortgages, loans, wealth management and private banking. The bank has a heavy presence in Dubai, where it gives out significantly in loans.

The bank earned revenue of $16.06 billion in 2010. In the same year, the bank’s net income stood at $4.23 billion while its operating income was $6.12 billion. A whooping $517 billion make up the bank’s assets. Its total equity as at 2009 amounted to $27.93 billion.

In spite of the bank’s exemplary performance through the years, it has been faced with serious scandals that threatened to dent its credibility. The bank’s failure to hire local talent has been one of its major underbellies. Having all senior management employees as expatriates has impacted negatively on the bank’s performance, especially in the Middle East. This leads to disappointment when local professionals are not hired yet the institution is set in their backyards. This further leads to general discontent among the local communities. As a result, a good number of them would prefer going to institutions with their own people for financial services, rather than negotiate with strangers in their midst.

Research on the internal problem bedeviling Standard Chartered Bank was carried out through interviews and analyzing secondary sources of information. The research identified the head of Human Resource Management who provided valuable information on the hiring trends adopted by the bank. He provided the bank’s nominal role to back up his responses to the interview questions.

To the question as to how often a local professional was hired into the senior ranks in the bank, the responded stated that only one senior personnel had been hired from the locals since the inception of the bank in Dubai. However, most junior employees are Dubai natives. But in most of the senior positions, professionals were usually flown in from Europe or America.

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Major commercial bank in UAE

There are both Major foreign and major local banks in Dubai and the UAE ready to look after your money, or lend you someone else's money. All dirham lead back to the UAE Central Bank which governs and licences financial institutions in the UAE. Retail customers will usually head to one of the commercial banks or Islamic banks. There are two other types of bank categories - merchant or investment banks, and industrial banks. One of these local banks is National Bank Of AbuDhabi:

The National Bank of Abu Dhabi (NBAD), the Number One Bank in the UAE, was incorporated in 1968 and is listed in the Abu Dhabi Securities Exchange (ADX), under stock code NBAD

NBAD has one of the largest networks in the UAE with an expanding network of more than 120 branches and cash offices and 490 ATMs across the country. NBAD’s international network consists of 50 branches and 60 ATMs in 12 countries stretching across four continents from the Far East to North America, giving it the largest global network among all UAE banks.

Since 2009, NBAD has been ranked consecutive year one of the World’s 50 Safest Banks by the prestigious Global Finance magazine, making NBAD the safest bank in the Middle East. NBAD was also named in 2011 the Best Bank in the UAE for the third consecutive year and for the fifth time in a decade by Euromoney. NBAD surpassed the US$1 billion net profits in 2010, becoming the first UAE bank to reach this milestone.

NBAD is rated senior long term/short term A+/A-1 by Standard & Poor's (S&P), Aa3/P1 by Moody’s, AA-/F1+ by Fitch and A+ by Rating and Investment Information Inc (R&I), giving it one of the strongest combined rating of any Middle Eastern financial institution.

A comprehensive financial institution, NBAD offers a range of banking services including retail, investment and Islamic banking services.

NBAD grows strategically toward its Vision to be recognised as the World’s Best Arab Bank.

Marketing Dates in Europe

Dates are fruits that are cultivated in the tropical climate, and are thus common in the Middle East, North Africa, and North America and in small parts of Spain. This article evaluates why, how and what aspects a company in the Middle East would want to use in internationalizing its markets to Europe. Kingdom dates was established in 1998 using 100% U.A.E. capital. It is one of the largest companies in the U.A.E working in the dates’ field. The policy of the company is always to generate new ideas in dates, and engage in the development of the date products, tastes and shapes like almond date, chocolate date, petit four date and honey date with almond. Kingdom dates products’ distribution is all over U.A.E, therefore its clients can find the products in all hypermarkets, in addition to their own specialized shops for dates, plus stands in the big centers, and their distributors in Dubai Duty Free, Abu Dhabi Duty Free, Deira City Center and Mall of Emirates. Kingdom dates has its own factory (Gulf Factory) located in Ras Al Kheima, with a very big factory space, supplied with the latest technologies and machines, which gives perfect new products. The factory fulfills the requirements of the health and cleanliness in all respects, since it is a HASSP registered firm in 2006.

Kingdom dates has a plan to venture in the lucrative European markets of France, U.K, Germany, Italy and the larger EU family. These countries account for 85 percent of total EU imports of dates in volume. Europe, and in particular the European Union (EU), is a key market for date exporters. The EU imports of dates represent only 10% of world imports in volume and they account for some 30% in value. This is a reflection that EU import prices for dates are comparatively much higher than the world average. The accessibility of most of these markets, especially in France and the U.K, is easy in that they have near zero obstacles to trade. The EU does offer a vast market for date products as the population size is big and the trade impediments in the block are little. Politically the vast EU block is highly stable and economically the region is enormous in terms of economic activity. The topography of Europe in general does favor some of the competitors (Tunisia and Algeria) in Middle East. However, the advent of technology in air travel does level the market field. The competitors from North Africa and North America do have some advantage in their production of Deglet nour dates and Medjool dates respectively that have a favorable recipient in the EU market. Kingdom dates specializes in production and processing of the common dates that are very popular with the U.K and German market segment. Though they fetch low prices, they have the highest moving rate in terms of sales. Through differentiation of the dates and value addition of the date’s products, Kingdom dates can be able to effectively venture in the EU trade block for profitable business.

Kingdom dates may use two market entry strategies in venturing the EU trade block. Exportation is one of the ways that Kingdom dates may use in its quest to have a share in the target market. Through this method, Kingdom dates has to find reliable agents that will in turn source for favorable buyers of its dates and related products. This may be time consuming and risky, as the agent does not bear any risk while holding the goods hence may prove too expensive for Kingdom dates. The best option and less risky strategy but effective is through having joint ventures. These are arrangements between two or more investors where they share ownership and control over property rights and operation. Joint venture is an all-embracing form of participation than either exporting or licensing. Kingdom dates can use this strategy in association with the hypermarkets and super markets in the EU block. This has its own advantages that well out way the disadvantages as well as the use of exportation method. They include sharing of risk and ability to combine the local in-depth knowledge with a foreign partner with know-how in technology or process, joint financial strength since the other associates will come in as investors and it may act the best option to be source supply of a third market segment.

Despite the challenges that may come with joint ventures as in not having 100% control of management and different views on expected benefits, careful mapping in advance of how and what to achieve will help to overcome this challenges.

 

Impact of Economic recession on UAE

Impact of Economic recession on UAE

As Bloomberg notes:

Dubai suffered the world’s steepest property slump in the global recession, with home prices dropping 50 percent from their 2008 peak, according to Deutsche Bank AG.

As the CBC notes, things went South quickly in Dubai: Hundreds of billions of dollars worth of building projects were delayed or cancelled. Thousands of jobs disappeared. Dubai, playground of the über-extravagant, suddenly found itself facing the very real possibility that its biggest state-owned company, Dubai World, could go into bankruptcy. It warned it was having trouble making debt payments on $59 billion US — money borrowed to pay for all the excess.

Global Impact

The CBC also notes that Dubai World has holdings worldwide:

Dubai World is Dubai’s main holding and investment enterprise, but its holdings range far beyond the Persian Gulf area … Another Dubai World holding — DP World — operates Centerm, a container terminal in Vancouver’s inner harbour. DP World acquired the terminal when it bought the marine terminal assets of P&O Ports in 2006, and plans to spend $140 million to expand it. That purchase also gave it ownership of many key U.S. ports — something that raised national security concerns in the U.S. Some American legislators didn’t like the idea that U.S. ports would be controlled by Middle Eastern state-owned enterprises. DP World subsequently sold its U.S. port assets.

In Britain, another Dubai World subsidiary, Leisurecorp, bought the Turnberry Resort in Scotland in 2008 — home to the 2009 British Open — for more than 50 million pounds.

In the U.S., Dubai World’s investment arm, Istithmar World, bought the luxury retailer Barneys New York in 2007 for almost $1 billion US. There were reports earlier this year it was trying to unload the retailer as the luxury market unwound and Istithmar racked up big losses from the global financial meltdown, but Dubai World’s chair denied it.

In addition, Bloomberg notes that India might be effected by Dubai’s economic problems: About 4.5 million Indians live and work in the Gulf region and remit more than $10 billion annually, according to government data. The turmoil may affect remittances, said Thomas Issac, finance minister of the southern state of Kerala, which accounted for about a quarter India’s migrant labor in 2005…

The biggest creditors of the United Arab Emirates, of which Dubai is a part:

Creditors Of United Arab Emirates (By Origin via Credit Suisse citing Bank for International Settlements):

UnitedKingdom:$50.2billion
France:$11.3billion
Germany:$10.6billion
UnitedStates:$10.6billion
Japan:$9.0billion
Switzerland:$4.6billion
Netherlands: $ 4.5 billion

Creditors Of United Arab Emirates (By Entity via Credit Suisse, citing Emirates Bank Association):

 HSBCBankMiddleEastLimited:$17.0billion
StandardCharteredBank:$7.8billion
BarlaysBankPlc:$3.6billion
ABN-Amro(RBS):$2.1billion
ArabBankPlc:$2.1billion
Citibank:$1.9billion
BankofBaroda:$1.8billion
BankSaderatIran:$1.7billion
BNPParabas:$1.7billion
Lloyds: $ 1.6 billion

UAE PEG THE AED TO THE EURO

UAE PEG THE AED TO THE EURO

The US and eurozone debt crises have ushered a new era of the improbable in currency and financial markets. This may be a good time to re-assess the UAE's policy of "pegging" the dirham in a constant relationship of Dh3.67 per US dollar.

Gulf economies have anchored their domestic currencies to the US dollar. But new uncertainties surrounding the dollar lead many to ask if the UAE should either a) repeg the dirham to a basket of world currencies or b) float the dirham and pursue other monetary objectives.

Repegging would likely involve a range of currencies including the euro and the pound sterling. This might allow the dirham to remain strong against other currencies, but that may not be a desirable policy objective. After all, a weak dirham increases foreign demand for both tourism and real estate - two important pillars of the UAE economy. in addition, moving to a basket of currencies would introduce uncertainty in budgeting since oil, which is traded in dollars, remains an important part of central and sub-central government revenues. And including sterling in the currency basket would likely achieve a strong dirham but the euro, just like the dollar, is currently beset by uncertainty with the added risk of a eurozone break-up.

THE Zimbabwe economy

This report will address what Zimbabwe is currently experiencing of an inflation rate of over 7600% per annum. The crisis started in 2000 when the Zimbabwean government effectively bought farms and  displacing farmers from their lands then distributed the land to people who are close to Mogabe. Thus Leading Zimbabwe’s economy immediately into recession and inflation began to rise.
Just like everyone else the Zimbabwe people were suddenly faced with the crisis of having to pay much more for things, and they didn’t have enough because there was a decrease in output of the farms and agriculture products due to the polital corruption, so the Goverment started printing more money to cover it. Thus lead the Country to enter Hyperinflation based economy what happened worsen th esituation when Zimbabwe’s Reserve Bank  has been ordered by Mugabe  to print amounts of currency that grow the money supply at a rate well over Zimbabwe’s inflation rate. He also stated recently that Zimbabwe will continue this practice of printing more currency as and when required. printing more money cause hyperinflation which meant money supply is increased without taking an account of the overall economy of Zimbabwe and it eventually lead the currency to devalue. In plain economy if the supply of money increases above the inflation rate, it means the rate of inflation increases too. The Zimbabwe goverment has been printing trillions of local currency at a time when their economy is declining. In addition to that to worsen the situation Mugabe has imposed on traders to fix their prices had led the economy to contract and get worse because there was little demand on the supply and increase in cash flow circuling the country. If money supply growth is stopped and the goverment did stop printing money, people simply won’t have enough currency to buy anything anymore. if they are really to fight thi hyperinflation they should follow the footstep of Bolivia when they faced this situation

Globalization and Economy

Globalization is also referred to globalism. This term is used to explain the way the relationships of people, their culture and the business relations have increased globally. However, it is mostly used to refer to the economic relations. This includes the distribution of products and services around the globe and this is usually coupled with the reduction or removal of barriers that hinder international trade. The barriers include the tariffs, import quotas and fees imposed on exported goods. Apart from the economic view, globalization also refers to the exchange of ideas, cultures and languages across nations of the world (Wolf 12).

Free trade, on the other hand, is a type of policy held by certain countries. With such a policy, the country tends not to discriminate against goods brought in to the country and it does not interfere with goods being exported through the application of tariffs or subsidies respectively. The law of comparative advantage also applies for this policy. This is because it ensures that the member countries (trading partners) benefit equally from the trade of their services and products.

Several countries have continued to decrease the tariffs and currency barriers on international trade. Other countries have also made agreements in order to reduce some of the barriers that may hinder international trade. One of the agreements includes the Central America Free Trade Agreement. Another is the North American Free Trade Agreement. Free trade also ensures that there are no policies that distort trade by giving other companies or households advantage over others (fair trade). These include certain trade laws, regulations or taxes.

Islamic Finance and one of its tool

Islamic finance is based on the elimination of interest and speculation uncertainty from financial transactions. Islamic contracts are based on these criteria.

Murabaha

This contract involves the sale of goods on which should be delivered immediately with their payment being delayed until an agreed upon date. The price of goods has a profit margin agreed upon by the buyer and the seller attached to it . Normally, the market price of goods is shared between the buyer and seller in this contract. Murabaha is a form of sale based on trust, whereby, the buyer truly trusts that the seller has honestly disclosed all the necessary cost encored. After cost discussions, a profit margin is agreed upon preferably as a fixed cost. In the event that an international Murabaha transaction is bound by a foreign currency lets say the Dinar, the importer would demand authorization and confirmation letters from the buyer and seller stating the currency in which the transaction shall be carried out. The registration of the transaction can only take place after both parties have agreed on which currency the transaction should be carried.

If the buyers’ records are in a currency other than the Dinar, e.g. the Euro, it is his right to demand that the transaction be registered in his own currency. Murabaha does not prohibit the use of western currency and leave’s matters regarding exchange rates to the users’ discretion. It is permissible to transact using any type of currency and one is also allowed to convert the currency used on the transaction into their own currency at the exchange rates available on the date of purchase.

The amount of profit gained from a Murabaha transaction is not a reward for using the investor’s money. Simply put, in a Murabaha transaction, the investor cannot take money without performing any service other than use his money for the transaction. Money cannot increase without any labor input (Hosein, par, 10).  In Murabaha, an item is bought at its original cost and sold to someone else for a profit to be paid over time. The profit and the time period are factors agreed upon by the buyer and seller.

Interest (Riba) as offered in a conventional bank differs from Murabaha in that here money is lent to someone for a profit. Murabaha is trade that involves selling of goods at a profit which is paid according to the agreement of the buy and the seller.

It is not forbidden to transact with a person who in the interests of honest trade has traced the owner of goods he wants to buy provided that the terms are those agreed upon between him and the owner. If he is to enter into a new contract with you for the same goods, it is not permissible to transact with him for you will be taking twice the value of the goods from him which is Haram.

Murabaha is an interesting way of doing business where the buyer is asked how much profit he thinks is fair for the product he wants to buy. When considering today’s  conventional trade, whereby, some of the products on sale are grossly overpriced and profiteering is the order of the day, where little or no consideration is paid to the consumers. Murabaha's way of doing business would be good especially now when economies are battered by the global economic meltdown.

Ahmad, Aldouni. “Islamic modes of finance and the role of the sukuk”, Q finance,  n.d.. Web. 20 May. 2012.

Ahmed, Mohamed & Sattar. “Abdul. Sharia Opinions (Fatwa) on Murabaha”, Dallah Al-Baraka. N.d. Web. 20 May 2012.

Fareed, Faraz. "Islamic Finance Basics – What is Murabaha, Ijara, and musharakah /mudarabah?" Islamic finance affairs, May 25, 2007.  Web. 20 May 2012. <islamicfinanceaffairs.wordpress.com>.

Hosein, Nazar. "Islam, Murabaha and Fixed Deposits: Islamic scholar Imran Nazar Hosein." Imranhosein.org. Nov. 2011. Web. 20 May 2012.

Zaheer, Khalid. Is charging more on credit sales (Murabaha) permissible? n.d.

Web. 20 May 2012. <Khalid Zakeer.com>.

Comparing Jordan Economy with GCC country

1.1 Economic Growth

An examination of the economies of Qatar and Jordan shows a significant degree of disparity wherein Qatar far outpaces Jordan in terms of GDP (Qatar: 173 billion, Jordan: $36 billion), GDP per capita (Qatar: 92,501, Jordan: $5,899) and GDP percentile growth (Qatar: 18.8%, Jordan: 2.5%). The reason behind Qatar's economic success can be attributed to its export based economy that centers primarily on exporting oil, natural gas and petroleum based products to various international consumers. As a direct result of such actions, Qatar was able to become the richest country in the Arab world due to the power of its natural resource exports alone. On the other end of the spectrum Jordan is, unfortunately, is not rich in resources as compared to other countries within the Middle East . Lacking significant amounts of natural resources in the form of oil and gas resulted in the country relying on international exports in order to address its energy needs (Mishal, 20-34). It must be noted that due to its current location the country has had to deal with significant scarcities in its water supplies and, as such a large percentage of income that could have gone into industrial development, is instead spent on providing basic utilities to its local populace

1.2 Standard of Living

When comparing the standard of living of Jordan and Qatar it can be seen that the difference is actually quite low, primarily due to the significant amount of investments the Jordanian government has made into education resulting in the creation of a higher standard of living despite having fewer natural resources. Recent studies such as Sharp (2012) state that Jordan has a high standard of living with the current rank of 11th within the developing world. In fact, it can even be stated that Jordan has the second highest standard of living within the Middle East being second only to Qatar. The reason behind is a combination of government initiatives in affordable housing, financial management and education which have resulted in significant boons for the local population. Not only that, despite the relative instability within the Middle East, Jordan actually enjoys a relatively high level of political stability with few if any instances of social unrest. All of this has led to significant improvements in the overall perception of foreign investors in the country resulting in high levels of foreign direct investments which have boosted the country's industrial potential to a significant degree. It must also be noted that due to the demand for Jordanian labor within the Middle East this has also resulted in an increase in foreign currency remittances to Jordan which has enabled it to boost its foreign currency reserves.

1.3 Employment

Despite such obstacles, the Jordanian economy is actually quite robust in terms of the strength of its labor force as compared to Qatar. Based on the study of Khatoon (2010) it can be seen that the Jordan is actually one of the largest suppliers of skilled labor within the Middle East, easily surpassing Qatar in terms of the amount of its population that is involved within the local labor force . It must be noted though that reliance of Qatar on its oil and gas industry can actually be considered a negative aspect of its economy given that oil and natural gas resources are finite in nature. In the long term, it can be expected that when Qatar's natural resources run out, Jordan will be able to surpass them due to the robustness of its local industries and the strength of its skilled labor force. One particularly interesting aspect of Jordan's employment profile is that due to the relatively high demand for skilled Jordanian workers this has resulted in a large percentage of the labor population (approximately 1.1 million) actually being situated in various countries abroad. It is based on this that current statistics on the country's labor force are actually inaccurate given that most of these workers remit money back to their families from locations overseas and as such contribute significantly to the Jordanian economy without actually being employed within the country. Aside from its industrial parks that are fueled through significant foreign direct investments, Jordan also enjoys a rather healthy tourism and medical tourism sector that brings in approximately $4.4 billion in revenue per year. When combined with the country's IT and agricultural industry it can be seen that Jordan has a sufficiently diverse assortment of potential industries for its local labor force. This is in direct contrast to Qatar which is only now starting to develop its local tourism industries through a variety of ventures such as the FIFA World Cup.

1.4 Stable Prices

A look at Jordan's economy reveals a relatively stable local economy with inflation being kept in between the 4.5 to 5.5 range. While the country was affected by the 2008 financial crisis, as evidenced by the 14 point increase in inflation, overall Jordan has been able to practice sound macroeconomic policies and has been able to keep inflation within the country to a minimum. The same cannot be said for Qatar; between the periods of 2006 to 2007 the country experienced a massive inflation from 11.84% in 2006 to 15.05% in 2008. This may have been due to the significant global demand for oil at the time as evidenced by data after the 2008 financial crisis (resulting in a drop in the demand for oil) wherein inflation within the country actually fell to -4.86% in 2009 to 1.92% in 2011. Such a result is indicative of the inherent vulnerability of the local economy of Qatar to oil price shifts and, as such, should be a cause for concern given the volatility of oil prices.

Inflation in the UAE

in This entery i will discuss about the recent yeas inflation rates in the UAE, i can say the UAE is considered one of the most and unbeleivbly rowing economy in the world, even its considered an oil economy base however you can find the economy is fueled with other source of income such as FDI and services because we are a growing economy recent study shows that there will be an increse in wages in upcoming years which will help increase inflation, while recent wage increases are likely to support domestic demand further, putting rising pressure on prices. however economist say inflation is not a worry in the UAE since the sources of inflation are under control. After averaging 12. 3% in 2008, the UAE headline rate of consumer price inflation fell to 1. 6% in 2009 due to some central bank regulations, Having said that, it will be a sluggish process before housing costs start rising significantly, and it is anticipated that consumer price growth will remain at relatively low levels, reaching 2. 5% in 2011 and 2012, why I mentioned housing is because it is one of the most ifluential aspect in the UAE economy, the property sector played a huge role in terms the recent recession and inflation rates. in terms of UAE market the property market started to see some groth in it and new projects are established and thus injecting soe liquidity into the market which might increase the inflation rate in the near future

Printing money and hyper inflation

In this blog im going to discuss what does printing money means and why goverment resort to this solution and what are the outcome of doing such thing, Printing Money creates a sense of nervousness amongst both economists and the general public. If a government prints money faster than the growth of real output it reduces the value of money thus causing hyperinflation such as goverment of Germany and recent years the Goverment of Zimbabwi face and you can see the result so of hyperinflation will eventually hurt the economy and its public which means if one who is experiencing hyperinflation would buy a bottle of water it will cost you million of the locla currency and this is because the devalue of money and it will burden the public and the country will face deaper recession which will take decades to recover from. Governments often resort to printing money when they cannot finance their borrowing.
why do Goverments prints money, it might be becuase they fear of deflation, lets first describe what is deflation, deflation is a decrease in the general price level of goods and services, Deflation occurs when the inflation rate falls below 0% This means a person can buy more goods with the same amount of money over time, the effect of deflation is

1. Decreasing nominal prices for goods and services
2. Increasing buying power of cash money and all assets denominated in cash terms
3. May decrease investment and lending if cash holdings are seen as preferable (aka hoarding)
4. Benefits recipients of fixed incomes

•  (Wikipedia).

 

The Japanese Economy 2012

Im writing in this blog the summery of the japnese economy in recent years, not to mention the after WW2 because what happened after that had the world surprised and admired to what happened to the country who once bomarded to the ground by the Atomic Bomb, Usually self-sufficient in rice, Japan imports about 60% of its food on a caloric basis and it is considered to have one of the largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been noticed a 10% average in the 1960s followed by approxematly  5% average in the 1970s, and a 4% average in the 1980s. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2011 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2011 due to the challenges faced by the japanes economy and not to mention the political unrest between nations I mean japan most important economic partner, exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9. 0 magnitude earthquake in March disrupted manufacturing and export was effected due to the strong yen which demmonished the export trend not to mention the bad influence of the results of the nuclear meltown in Fokishima. Electricity supplies remain tight because Japan has temporarily shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami. mentioned below some of the economic data out of japan in 2011

GDP $4.389 trillion
GDP - real growth rate -0.5%
GDP - composition by sector
          agriculture: 1.2%
          industry: 27.3%
          services: 71.6% (2011 est.)

Inflation rate 0.4%
Exports $800.8 billion

I beleive a country like japan has the capability of recovering given the right sercumstances.
 

History brief:

 

The Zimbabwean dollar's predecessor, the Rhodesian dollar was essentially equal to half of a pound sterling when it was adopted during the decimalisation of 1970, the same practice which was used in other Commonwealth countries such as South Africa, Australia, and New Zealand. The selection of the name was motivated by the fact that the reduced value of the new unit correlated more closely to the value of the US dollar than it did to the pound sterling.

 

Reason for hyperinflation

 

The main cause of hyperinflation is a massive and rapid increase in the amount of money (estimated at 17,000%), which is not supported by growth in the output of goods and services.

This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run.

 

Current situation :

 

 Today Zimbabwa it can boast strong growth and single-digit inflation rates. In 2008, Zimbabwe’s annual real GDP growth rate was a miserable -17.6 percent and its annual inflation rate was 89.7 sextillion percent—that’s roughly 9 followed by 22 zeros.

 

The spontaneous dollarization brought an end to the horrors of hyperinflation.

In late 2008, the people of Zimbabwe spontaneously dollarized the economy. Thiers’ Law prevailed: good money drove out bad, and the government’s hands were tied. Indeed, the government was forced to officially dollarize in 2009. Since then, Zimbabwe has enjoyed positive GDP growth rates, a feat not accomplished since 2001

Money

The world is full of people running various businesses, organizations and even governments that deal with money all through different structured levels. They all have different interpretations in the event that money is in their pockets; wealth, power and contentment in nature among others. Money is any substance that serves as a store of value, meaning that people can save it and use it later smoothing their purchases over time; a unit of account providing a common base for prices; or medium of exchange which people can use to purchase and vend from one another (Asmundson and Oner imf.org). Its value differs in different regions and parts of the world when compared. However, it is a common accepted and standard means of exchange by people within a boundary; that is why an individual from outside a nation will find himself with either few or more money after currency change in a foreign land that does not share similar currency.

According to Leyshon and Thrift, there exist several forms of money, “namely; pre-modern money; commodity money; money of account; state money and virtue money” (3).  Money exists as paper (certified currency notes), metallic coins, made of kinds of metals and credit money which is easily convertible and highly appreciated through cheques. In the past, a variety of commodities ranging from iron, gold, copper, silver, shells and animals served as a medium of exchange in various locations and times. The history of money can be traced back from the act of exchange; however, barter trade was not able to handle the complexity of life dealings and so had to be replaced with a common medium. Money must be easy to transport and identify, durable, difficult to duplicate, divisible and widely accepted (“the measure of money,” boj.org). 

Leyshon, A., and Nigel Thrift. Money/Space: Geographies of Monetary Transformation. London: Routledge Taylor and Francis Group, 1997. Print.

Asmundson, Irena, and Ceyda Oner. “What is money?” imf.org. September 2012. Web. 3 November, 2012. <http://www.imf.org/external/pubs/ft/fandd/2012/09/basics.htm>