Monday 28 September 2009

How long for business activity to recover in Dubai? (Re-post)

Dr Marc Faber established a model of the emerging market business cycle in his classic book ‘Tomorrow’s Gold’ published in 2002. It describes the phases of the business cycle from boom to bust and back again.

On my reckoning Dubai is probably in phase six of this cycle now, although possibly only just. Phase six is when the business cycle starts to bottom out, and this continues into phase zero where a new base is established for the next boom.

As Dr. Faber notes the down phases of five and six can be compressed into a year, as in the Asian Financial Crisis but can take four to six years.

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