A Look At The UAE Economy
The United Arab Emirates is a brotherhood of seven emirates: Dubai, Abu Dhabi, Ajman, Fujairah, Sharjah, Ras-al-Khaimah, and Umm-al-Qaiwain. Around three decennaries back UAE was one of the states which were the most backwards in footings of economic system and wealth. But the state had a monolithic resource of oil and crude oil. These oil resources have helped the state to take part in running of the turning economic system and compete with all those fastest turning European economic systems. The oil and gas resources of the state have supported its economic system in the initial phase of growing when the planetary oil monetary values were high. At this initial phase the state followed the development scheme of a resource based industry and so switched to the industrial economic system which was based on the use of the resources. The authorities of UAE has now increased its outgo on making occupations for the UAE subjects. Construction and existent estate industry is besides one of the major assisting custodies of the UAE ‘s economic system. But this economic growing was breached by the planetary economic meltdown in the twelvemonth 2009-1010. The crisis has compelled the UAE authorities to concentrate more on the variegation of economic system. This study presents a thorough and factual treatment of the economic system of the UAE. ( CIA – The universe Fact Book )
Purposes and Aims
The purpose and aim of this study is to portray a clear position of the fast gait turning economic system of the UAE. Some of the major economic indexs will be studied in this study which is the most of import standards for measuring the economic system of any state. The survey of these indexs will make a clear image of the current economic status of the state and its current rank in the universe. Some major factors of the turning economic system will besides be studied. The part of factors like, the turning Real estate and building industry, Tourism sector and the oil and gas resources of the UAE will besides be discussed in this study.
The UAE is a member of the GCC trade group and besides a member of World Trade Organization, World Bank and International Monetary Fund for the past 10 old ages. The state has ne’er required fiscal aid from the World Bank or the International Monetary fund because of its strong fiscal place and immense hoarded wealths of wealth. Balance of Payments which is an of import economic index to find the state ‘s fiscal status in the planetary market, in the old twelvemonth was more than 100 billion. In the old twelvemonth the official modesty history of the UAE has been increased by 50 billion AED. The economic system of the state is majorly driven by touristry, building, existent estate, and oil industry. The development and the strength of the UAE ‘s economic system can besides be seen from the consequences of the financial policies and schemes of the states and their executing. The state has now developed a diversified economic system and exports of non oil merchandises. In the initial phase of the UAE ‘s development and economic growing oil and natural gas resources played a critical function. But this was the narrative when the monetary values of oil and gas were really high in the international market. The monetary values of oil and gas started fluctuating so the state decided to diversify its economic system and started investing in other sectors excessively. Now these other sectors have become the major subscriber in the economic system of the UAE by take downing down the ratio of part of oil and natural resources. ( FRANCO, 2007 )
The above survey of the major economic indexs and the major subscribers of the UAE ‘s economic system create a clear overview of the economic system of the state. Based in the above survey few points can be made:
The GDP of the state has been increasing continuously in the past few old ages but the rate of alteration in the GDP has declined in 2009-2010 due to the planetary economic meltdown. So the economic system of the state should be more supported by the public sector as the existent estate and oil sector are confronting problem in this state of affairs.
Though the economic system of the state is diversified it still needs more diverse investing in other sectors so that it does non hold to confront any bad impact due to any economic crisis.
The oil militias of the state are the chief support for the state ‘s economic system so these should be used with a proper planning of the current market demand and supply and do the most use out of it.
The state should besides be more focussed on bettering the educational and wellness attention installations as these have an indirect but significant impact on the economic system of any state. ( Shihab )
For a elaborate and thorough survey of a state ‘s economic system the facts and figures of the basic economic indexs are the primary beginning of survey. These economic indexs give a clear image of the economic profile of a state.
GDP Growth Rate
The growing of any economic system is measured by the addition in the value of merchandises and services manufactured in the state. This growing rate is measured as the per centum addition in the GDP. The undermentioned figure shows the growing rate of GDP in the past few old ages.
The rate of growing of GDP of the UAE was highest in the twelvemonth 2003 and a negative growing was recorded in the twelvemonth 2010. This negative growing was the impact of planetary economic crisis. ( UAE GDP Growth Rate )
GDP Per Capita
The term Gross Domestic Product per capita is calculated by the value of the goods and services manufactured in a state divided by the entire population of the state in the given twelvemonth. GDP per capita is besides an of import step of a state ‘s economic system and the national income. The figure given below shows the GDP per capita of UAE in the past decennary.
The highest GDP per capita of the UAE was recorded in the twelvemonth 1973 i.e. 49329.00 dollars. This was the clip when the economic system of the UAE was wholly dependent on the oil and gas resources of the state. ( UAE GDP Per Capita )
Balance of Trade
The balance of trade of the United Arab Emirate in the December 2008 was recorded to 231.1 billion AED. The economic system of the state is no more dependent on the oil and crude oil merchandises but still they are an of import portion of the gross of the state. The major ingredients of the state ‘s imports are machinery, chemicals, conveyance equipments, and nutrient and the major trading states with UAE are India, China, Japan and European Union. The undermentioned figure shows the trade balance chart of the UAE.
The trade balance of the UAE has been really much dependant on the oil and crude oil gross. The trade balance of UAE including the oil merchandises which has ever been surplus in the past old ages whereas excepting oil and crude oil the trade balance was in shortage throughout the last decennary. The state recorded a excess in trade balance ( including oil ) of 19 % of the entire GDP in the twelvemonth 2004, the value of which was 63 billion AED. The shortage in trade balance ( excepting oil ) in 2000 was maximal i.e. 26 % of the GDP which has been diminishing bit by bit in the past old ages and is recorded merely 8 % of the entire GDP in twelvemonth 2004 with the value of 27 billion AED.
The trade balance of UAE from the past old ages has been noticed to be switching from shortage to surplus. A recent study from the Ministry of Foreign Trades of the UAE said about the commercial and concern dealingss between UAE and India that the trade balance of UAE with India which was in shortage of deserving 7.3 billion AED in the Q1 of 2009 has now been traveling to positive side and in the Q1 of 2010 the trade balance was in excess with the sum of 2.2 billion AED. The comparing of these two quarters shows that the value of non oil international trade between the two states has been increased up to 83 % . The value of the international trade in the Q1 of 2009 was equal to 20.5 billion AED and the value of trade in the Q1 of 2010 was 37.5 billion AED. These economic indexs are the cogent evidence of strong bilateral concern and commercial relationships between the UAE and India. ( U.A.E. Trade Policy )
Balance of Payment
The balance of payments has to be done from assorted positions in the UAE. Harmonizing to the IMF three major histories need to be taken attention of for the balance of payments in such a diverse economic system, these histories are:
Current Account – This history keeps path of the state ‘s assets from trades of goods and services and one sided minutess from foreign states. In the twelvemonth 2004 the UAE Central Bank recorded the entire balance of -9 billion AED.
Capital Account – This history is for the flow of payments of capital points. In 2004 IMF reported 78,062 million UAE capitals of machinery, medical and electricity. The export value of the above capital was 610 million AED. The trade excess reported by CIA in 2004 was $ 19 billion.
Fiscal Account – This history handles the trade of stocks and bonds, currency dealing. The net investing projected by the International Monetary Fund in 2005 was 26.3 billion AED. The 392 commercial Bankss of the state have the entire sedimentation of 491,523 million AED. ( FRANCO, 2007 )
Export and Import Volumes
Percentage alteration in Import Volume ( Goods & A ; Servicess )
In the twelvemonth 2010 the per centum alteration in the entire volume of import of UAE which includes all the goods and service was -13.027 % . The norm of universe ‘s per centum alteration in volume of import is 7.94 % which means that the UAE is more than 20 % than the universe ‘s norm. The following tabular array shows the information of per centum alteration in the import volume of all the goods and services of the UAE.
Percentage alteration in Export Volume ( Goods & A ; Servicess )
In the twelvemonth 2010 the per centum alteration in the entire volume of export of UAE which includes all the goods and service was -8.621 % . The norm of universe ‘s per centum alteration in volume of export is 7.69 % which means that the UAE is more than 15 % than the universe ‘s norm. The following tabular array shows the information of per centum alteration in the export volume of all the goods and services of the UAE.
Major Factors of the Growth of UAE Economy
Today some of the major lending sectors of the UAE economic system are following:
Real Estate and Construction
The existent estate and building concern has been on the rise in the GCC part for the past 5 old ages. UAE has showed up as the most rising state in the existent estate and building industry. The value of building undertakings in the twelvemonth 2008 in GCC was more that 1 trillion USD and more than two 3rd of the undertakings were undertaken by the UAE. This sector has contributed 15 % in the UAE ‘s entire GDP in the twelvemonth 2008. The existent estate and building sector of the UAE has been turning twelvemonth on twelvemonth continuously. Dubai, Abu Dhabi and Sharjah are the three emirates where the building industry is on roar. This roar in this sector has been made possible by the enterprises of the UAE authorities. With the purpose of variegation of the state ‘s economic system the authorities has taken enterprises of liberalisation in the belongingss and building Torahs. This sector was suddenly affected by the planetary economic meltdown. Due to the economic crisis most of building undertakings in UAE got held up or canceled. The current building undertakings of the UAE are deserving 714.8 billion USD. ( Construction Sector Outlook: Ambitious 2010, Promising 2011, 2010 )
The travel and touristry sector has been increasing surprisingly in the whole universe. The part of the sector in the GDP of the universe has been traveling up steadily over the past old ages. In the twelvemonth 2005 the disbursement on the touristry and traveling was 5.9 trillion USD and this figure was increased in the twelvemonth 2006 to 6.5 trillion USD. In the twelvemonth 2006 around 28 million riders passed from the Dubai International Airport. More than 15 million tourers visited the metropolis in the twelvemonth 2010. The touristry sector of the UAE is turning this fact can be visualized by the ranking of the state given by the WTTC. UAE has been given 18th rank on the footing of substructure, conveyance installations, Torahs and ordinances, human resources, and security. Presently the Tourism industry is besides one of the most occupation offering sectors of the UAE. 8.5 % per centum of the occupations are offered by this industry and this figure is expected to lift up to 9.1 % by the twelvemonth 2016. The authorities of UAE is profiting its investing in the building and substructure industry in the signifier of touristry and traveling. The fantastic and hypnotic edifices, manmade islands, and extremist epicurean abodes are the chief point of attractive force of tourers to UAE. ( United Arab Emirates touristry sector fight ranked 18th globally, 2007 )
Oil and Gas
Oil and natural gas resources of the UAE are one the largest in the universe. These resources have leaded the state towards the turning economic system. The oil and gas sector of the state used to be the lone responsible sector for the growing of the UAE. But for the past 5-8 old ages the other sectors are besides preparing in the UAE. This does n’t intend that the oil and gas resources of the state had stopped lending. But the ratio has decreased in order to diversify the beginning of income of the state. The UAE has about 9 % of the oil and 5 % of the natural gas resources of the universe. Among the Middle East states the UAE holds the 4th rank in the oil militias. The UAE is continuously seting attempts to increase the production of the oil and gas for the supply in the international energy market. Due to the fluctuation in oil monetary values the production of other oil maker states has declined but the UAE has increased the production by 31 % .
The table shown above shows the refinement capacity, production of oil and oil militias in the UAE. The oil and natural gas sector of the state contributed about 16 % in the entire GDP of the state.
( United Arab Emirates, 2010 )
Economy of a state is defined by some major indexs and these indexs of the UAE economic system shows that the state is one of the most underdeveloped and strong economic systems of the universe. The state has seen many ups and downs in its development phases so the authorities of the UAE is really much aware that the economic system of the state should non trust on peculiar resources. Hence the investing in other sectors has increased. Oil which is the chief plus of the state is being used with a proper planning of demand and supply. With the increased hedge of investing and planned usage of resources the state will be able to keep the current growing rate and maintain and better its current economic status.