Brace yourself: tough times are ahead. On the global front, the skyrocketing price of oil has precipitated high inflation rates in many countries worldwide, resulting in low spending power vis-à-vis continuously increasing prices of food products and other key commodities.
This has hit the world hard and what used to be just a worst-case scenario, that of a global economic downturn, is now slowly taking place. Countries like Malaysia, the Philippines, India, South Korea, Thailand, Spain, Belgium, Netherlands and France are now experiencing protests due to the increasing oil prices. Of course, several other countries are also affected, but are not as vocal and choose to suffer silently.
The widespread alarm is not totally unfounded and, understandably, people are nervous. Oil prices have reached an all-time high of US$140 per barrel, and at times such as these, people can only look to their governments for support – in this case, the people are screaming for a price-hike regulation scheme, especially for fuel.
In Dubai, we are facing a different war. Although the world oil price increase has a minimal effect on businesses here and elsewhere in the GCC, inflation on other forms is irrefutably present.
The number-one concern in the emirate today is that it has become an incredibly expensive place for expatriates to live.
According to the Xpatulator website’s International Cost Of Living Comparison, which conducted a study on the cost of living of 228 international locations: “Dubai in the United Arab Emirates is ranked 32nd most expensive city in the world for expatriates to live in.”
Overall, Dubai is ranked fifth most expensive in household expenses, including rent, mortgage, water and electricity; and is the first in the list of the most expensive for restaurants, meals-out and hotels.
All these would not be so much of an issue if not for the demographic imbalance in the emirates, where, according to the 2005 population census, “eight out of 10 people living in the UAE were born abroad.”
Additionally, we have other concerns to look at: the potential revaluation of the UAE dirham, the de-pegging from the US dollar, and the imminent implementation of the Value Added Tax (VAT).
These challenges are not unique. The circumstances of today and in the 1970s have similarities: the “oil-shock” phenomenon, soaring gold prices, unrest among workers and civilians, and the falling greenback, among others. The only difference is that we are better equipped to fight these challenges today.
Nevertheless, times like these are forcing us to take a closer look at the values and priorities that run not only our businesses, but more importantly, our lives. Now, more than ever, the world must be more open and flexible to change.
To drive for lower inflation rates, we must cut the unnecessary waste and apply the formula for lower prices: falling demand and rising supply. While we all try to weather these tough times, we must bear in mind that there are two kinds of challenges: the ones that we can actually control and the ones that are beyond our human capabilities.
Inflation is not something we have the ability to solve overnight. Obviously, it is now best to channel our energies towards those matters that we can control – our own backyard.
The pressure is on. One thing I try to keep in mind during difficult times such as these is that a diamond is just an ordinary rock put under tremendous pressure and heat. Now, you decide – are you a diamond? Or just a plain rock that caves in under pressure?
Source: Arabian Supply Chain