Macroeconomics indicator comparison between two economies

Introduction

The increasing economic development in UAE and Saudi Arabia has made these developing provinces an first-class state for those people who choose to spread out overseas or are interested in Foreign Direct Investment ( FDI ) . Globalization AIDSs to beef up their distribution channel and their economic systems. Saudi Arabia is quickly deriving importance as a maker and economic leader in the universe. These states have eliminated many of their trade barriers now and have a free trade economic system that attracts many concern work forces from around the Earth who seek new consumers and mark market for their merchandises ( Ahmed, 2007 ) .

UAE PEST ANALYSIS

POLITICAL

The stable political state of affairs of UAE plenty to pull about any major fiscal establishment that needs to put. These fiscal establishments can help in accessing capital markets emerging within the UAE economic system. the banking system developed my emirates is a relationship based system of banking with the pecuniary policy and system capable plenty to carry through funding supplies of a ulterior phase that may be equity renting or loans ( hypertext transfer protocol: //www.UAEforever.com ) .

ECONOMIC

Out of three million population of UAE 60 % of them are in the work force. In the UAE economic system the degree of FDI is really high. Globalization has helped better the UAE economic system greatly by conveying in 1000s of workers, services and merchandises from throughout the universe. UAE has been a member of World Bank, WTO and IMF for seven old ages. The state has immense wealth and has experienced trade excess of about over 100 billion dirham in the past twelvemonth ( uaeoffsets.com ) .

SOCIOCULTURAL

All of UAE citizens have high life criterion, a western life style and continues lifting fiscal places. The society remains free and unfastened to all types of eating houses, touristry, athletics and recreational activities. The multicultural nature of society and economic system bing in UAE allows fir many of the aliens to work at that place in good paid places ( Cateora, 2007 pg 68 ) .

TECHNOLOGICAL

The UAE population comprise of immature and highly technologically knowing professionals. The IT industry AIDSs touristry, hotel and IT service sector. The IT package industries and internet use in the gulf part is dual the rate of Europe. The UAE population has the largest users of cyberspace, orbiter and nomadic phone within the Middle East ( Cateora, 2007, 68-69 ) .

Plague Analysis FOR SAUDI ARABIA

POLITICAL

The politically stable authorities of Saudi Arab attracts many of the foreign investors and concern work forces. The authorities besides provides assorted inducements that attract many investors and touristry from around the Earth.

ECONOMIC:

Saudi Arab histories for the universe ‘s major oil manufacturer and exporters. This allows Saudi economic system to gain a high GDP. It besides helps its current history to equilibrate against the value of imports when the demand for oil is high ( Griffin and Pustay, 2006 ) .

Sociable:

The spiritual history of Saudi Arabia for the Muslim besides holds great significance. In the spiritual seasons people from all over the universe come to pay visit to the holy topographic points. This accounts for much of the gross for Saudi economic system. Hotels, eating houses and residential topographic points earn high gross in these seasons.

TECHNOLOGICAL:

Saudi Arab is a state that keeps itself technologically updated as it needs to provide a monolithic population of tourers and visitants from around the universe. Saudi Arab imports technological machinery from Japan and other states which enables it to be established as well-technologically equipt state ( Jackson Patricia, 2004 ) .

MACRO ECONNOMIC INDICATORS OF AN ECONOMY

BALANCE OF Trade

It refers to the difference in the VALUE of imports and the VALUE of exports when a state trades. ( Nouriel Roubini, 2004 )

SAUDI ARABIA

Saudi Arabian economic system reported a trade shortage of about US $ 32638.2 MILLIONS in the twelvemonth 2009 in malice of being the universe ‘s largest manufacturer and exporter of oil with more than 90 % of exports being based on it. Major imports of Saudi Arabia include equipment, machinery, nutrient material and chemicals with its chief trading spouses being European Union, China and Japan. ( tradingeconomies.com )

( Beginning: trading economics.com, indexs, international pecuniary fund )

Analyzing the tendency we see a stable balanced of trade from the twelvemonth 2000 to 2006.it so bit by bit increases boulder clay 2009 and falls really quickly in 2010.we besides see rapid rise from the Y ear 2005 to 2006 and from 2008 boulder clay 20210.

BALANCE OF Trade

UAE

The exports of natural gas and crude oil play an of import function in the UAE export economic system. It chiefly imports chemical, machinery and equipment from its major trading spouses: India, Japan, China and European Union. ( tradingeconomies.com )

( Beginning: tradingeconomies.com, Ministry Of Economy )

Unlike Saudi Arabia, the BOT of UAE shows a positive upward tendency. It grows steadily from the twelvemonth 2001 to 2005 and quickly reaches 211.3 billion 2007. It so falls to 170.85 billion in 2008 which is non excessively crisp a lessening as it has fleetly gone up in the twelvemonth 2009-2010.

GDP GROWTH Rate:

It refers to the gross domestic merchandise that is gained by ciphering the difference between the imports and the exports ( Ian Hobday, 1995, pg 312-319 ) .

SAUDI ARABIA

The economic system of Saudi Arabia expanded over 0.6 % last twelvemonth. The worth of Saudi Arabia GDP is 0.6 % of the economic universe or 369million dollars ( tradingeconomies.com )

( Beginning: tradingeconomies.com, Saudi Arabian Central Department )

The tendency shown for the GDP rate of Saudi Arabia is non stable. We see a crisp rise and a crisp autumn from 2001 to 2002 and from 2003 to 2004 making up to 7.66 % from 2004 we see a fluctuating GDP rate that falls to 0.6 % in the twelvemonth 2010. This downward tendency is non favourable for Saudi Arabia.

GDP GROWTH RATE

UAE

Unlike the, Saudi which expanded over the last twelvemonth, UAE Economy experienced contraction of 2.10 % last twelvemonth. The UAE GPD is deserving $ 261 billion and histories for 0.42 % of the sum of the universe economic systems. ( tradingeconomies.com )

( Beginning: tradingeconomies.com, Ministry Of Economy )

The UAE analysis of GDP growing shows a high GDP of approximately 8 % from the start of 2001.UAE and Saudi Arabia has a similar tendency boulder clay 2004. But UAE shows a 12 % rise in GDP rate from 2001, unlike Saudi Arabia which shows merely 8 % from 2001. Saudi Arabia GDP falls to 0.6 % by the terminal of the twelvemonth 2010 while UAE experienced negative rate of -2.1 % .

Inflation:

Inflation refers to the general addition in the monetary value degrees over the period of clip. ( G.F Stanlake, 1995 )

SAUDI ARABIA

The rising prices rate through the twelvemonth 2010 was reported at 5.51 % ( economictrading.com ) . It touched historical highs in 2008 with rising prices of 11.08 %

( Beginning: tradingeconomies.com, Saudi Arabian Central Department )

The rising prices rate of Saudi Arabia shows an upward tendency. It is 0.31 % in 2001 and continues to lift boulder clay 2009. The economic system so faces a gradual lessening in the rising prices rate and it falls to 3.5 % near 2010, from 11.08 % same twelvemonth. By the terminal of 2010 and the starting of 2011 we see rising prices once more expected to lift to 5.51 % .

Inflation:

UAE:

The mean rising prices rate of UAE is 6.27 % . The historical highest rising prices recorded for UAE had been 11.10 % . ( Beginning: tradingeconomies.com )

Beginning: tradingeconomics.com, Ministry of Economy )

The rising prices rate of UAE has grown steadily over the old ages. The tendency shows no downward tendency but it continues to turn from 2003 boulder clay 2008.Unlike Saudi Arabia high shows fluctuation and steady growing of rising prices, UAE economic system has faced an upward tendency for rising prices for the past old ages.

UMEMPLOYEMENT:

The unemployment rate is defined as the figure of people of the entire labour force who are unemployed or/and seeking for work.

SAUDI ARABIA:

Harmonizing to the last study the unemployment rate in Saudi Arabia was 10.5 % in Saudi Arabia. From 1999 boulder clay 2009 Saudi Arabia ‘s unemployment rate reached to the norm of 10.5 % . The historical tallness of Saudi Arabia ‘s unemployment rate was recorded at 12 % ( tradingeconomics.com ) .

( Beginning: tradingeconomies.com, Saudi Arabian Central Department )

The unemployment rate illustrated above shows an upward tendency of lifting unemployment in the Saudi economic system which is decidedly non a favourable index for the overall economic system. We see the per centum of the labour force unemployed falling from the twelvemonth 2007 to 2009 aggressively but it fails to maintain it lower and rises once more to 10.5 % by the terminal of 2010.

Unemployment:

UAE:

The unemployment rate of UAE far exceeds of that of Saudi Arabia. It was calculated as 20.60 in 2004 which was the historical tallness achieved for the UAE economic system ( Arabian Business.com )

For UAE economic system the unemployment rate shows an upward tendency but non as quickly and crisp as for the Saudi Arabia. But the entire per centum of the rate of unemployment in UAE is higher than of Saudi Arabia which has a fluctuating tendency for unemployment.

Interest Rate:

It refers to the monetary value of adoption and loaning.

SAUDI ARABIA:

The determinations doing authorization sing the involvement rates lies with the Saudi Arabian Monetary Agency ( SAMA ) ( Stephen Turnovsky, 1977 ) .

The involvement rate tendency shown above illustrates a downward initial tendency and so a little increasing graph followed by a sharper autumn with a stable and changeless rate from 2009 boulder clay 2010.

Interest Rate

UAE:

The UAE involvement rate determination doing authorization lies with the Central Bank of the United Arab Emirates ( Moza Ahmed, 2004 )

The involvement rate tendency for the UAE economic system and Saudi Arabian economic system is really different. Un like Saudi Arabia UAE faces many fluctuation through the old ages from 20007 boulder clay 2009.it starts at a higher rate, remain stable, falls and so rises rather aggressively. It so experiences small fluctuations and remainders at 1.80 with the starting of 2011.

FORCASTING THE ECONOMIES AND SUGGESTIONS FOR IMPROVEMENT.

SAUDI ARAB ECONOMY:

The complete analysis of past tendencies suggest that the inflationary force per unit areas might remain manageable and stable over the period of 2010-12.This rising prices will reflect the diminished involvement rate.A weakened involvement rate will oblige people to pass more. Demand for money will lift as indicated by the monetarist position. The increased supply of money will finally increase the monetary value degrees as the measure theory of money explains. There may be a fright of rising prices which may be so. Population growing will be bring forthing some local monetary value force per unit areas. The economic system is expected to turn by an mean 3.7 % in the approaching twelvemonth 2010-14. Resources reveal that the Saudi economic system is expected to be greatly supported by extended disbursement by the authorities therefore absorbing a big proportion of the occupation market ( Arab intelligence, 2010 ) . A strong addition in investing undertakings by the authorities is besides expected. There will be good domestic ingestion of oil but weaker oil export due to higher oil monetary values ( khalil hanware, 2010 ) . Due to stronger investing undertakings from the authorities the economic system will confront greater injections into it which will ensue in falling unemployment rate and lifting income degrees. This will go forth a favourable and positive impact on the Saudi economic system in the approaching old ages. But looking at the Saudi economic system from the Keynes view/Classical theory of income and employment we see as the employment and income degrees will lift due to injections in the economic system, there will come a certain degree, that aggregate demand will no longer convey any alterations in the income and employment degrees but monetary values will get down to lift which will bespeak rising prices in the long tally.

The growing prognosis for UAE is lowered by the IMF to less than 1 % . ( Hugh Tomlinson, 2010 ) . UAE economic system is expected to turn 2.9 % following twelvemonth ( EFG-Hermes Holding, 2010 ) . The investing activity is expected to be weak as the emirate is seeking to redefine its economic aims ( Bloomberg, 2010 ) . As the UAE economic system will seek to cut down its rate of rising prices unemployment is expected to lift every bit defined by the Phillip ‘s curve and his short theory of two Satans that exist in the society. For the longer tally, the monetarist position can besides be taken into history when we will see UAE economic system will seek to cut down its rate of unemployment. The offered higher rewards will finally be raising the cost of production in the long tally and immediately turning rising prices go oning the tendency the economic system showed for the rap old ages. This will ensue in falling income degrees and higher rate of unemployment as the backdown and injection attack suggests ( Shihab, 1990 )

Experts suggest that the above economic systems should seek to cut down their rate if rising prices particularly in instance of UAE. This may cut down the unemployment degree and the degrees of income will finally raise giving people higher life criterions. As for Saudi Arabia adept suggests the authorities to predate with its investing undertakings and pull other investors from throughout the universe. As the current history of Saudi Arabia has been greatly affected by the lifting oil monetary values, Saudi authorities should concentrate on developing trade and other export merchandise that may cover the current history shortage ( timeoutdubai.com ) .