The Impact of Global Economic Crisis on the organizations in oil Essay

The Impact of Global Economic Crisis on the organizations in oil producing countries - Essay Example The economies in Middle East, which were then among the fastest growing in the world; primarily driven by the soaring crude oil prices, were first considered immune, but by 2009 it began affecting the region including Gulf Cooperation Council (GCC) States. Most of the economies including UAE, Qatar, Bahrain, and Kuwait suffered significantly, due to the steep decline in their housing markets, which formed the crux of economic development in these countries. Saudi Arabia Economy: Saudi Arabia, which is the largest economy in the region, too suffered dearly due to its heavy dependent on crude oil, whose prices had retreated at record pace in 2009 (Berkmen et al., 2009). The impact of economic crisis was felt by the firms not only because of the dependence on oil, but also, as a result of numerous government controls over the main economic activities in the economy. The country has at least 25% market share of the world’s petroleum reserves, is regarded as the largest petroleum exporter in the world and plays a very crucial in OPEC deliberations and decision makings. The petroleum sector takes up to at least 55% of the GDP, 90% of export earnings and 45% of all budget revenue. 40% of this GDP is from the private sector. At least, 5.2 million workers play a vital role in the Economy of Saudi and especially in the service and oil sector. In order to reduce the dependence on oil, the government of Saudi Arabia had been encouraging the private sectors to increase the employment opportunities for the fast growing population. It has also begun to allow the participation of foreign investors and private sectors in the Telecom and power generation sectors of the economy. It was expected that the move will motivate other countries in the region to also embrace the concept in their economies. Strategies to diversify the economy and attract foreign investment into the country were given a boost when the government succeeded in joining the WTO in 2005, after many years of negotiation. This success and the high revenues from the oil, then further enabled it to build a very large budget surplus and easily facilitated expenditures on education, infrastructural development, increase government salaries, and make investments in job trainings and other timely and critical developmental projects. This no doubt lay the foundation for the economy to develop in a balanced way, as foreign companies were able to earn significant prof its, and in the process transfer hundreds of job skills to local employees, even as the country continue to earn billions of dollars from the sale of oil. The purpose of this proposed research consequently, is to critically examine the impact of global economic crisis on the financial performance and financial position of Saudi Basic Industries Corporation (SABIC), which is the largest listed company in Middle East region. This will entail the strategies used to obtain the results that the financial ratios and other statistical and analytical tools generated, during the study. The financial