The United Arab Emirates ( UAE ) is one of the most developed states in the universe ; based on assorted socio-economic factors same as GDP per capita, energy ingestion per capita, and the HDI. At $ 270 billion in 2008, the GDP of the UAE ranks 2nd in the CCASG ( after Saudi Arabia ) , 3rd in the Middle East-North Africa ( MENA ) part ( after Saudi Arabia and Iran ) , and 38th in the universe ) .
There are assorted diverting estimations sing the existent growing rate of the state ‘s GDP, nevertheless all available statistics indicate that the UAE presently has one of the fastest turning economic systems in the universe. Recently, the Ministry of Finance and Industry has been issued some related studies which they show that nominal GDP rose by 35 per cent in 2006 to $ 175 billion, compared with $ 130 billion in 2005.
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In last 10 old ages, UAE becomes less dependent on natural resources ( such as oil ) as a beginning of gross. However, the crude oil and natural gas exports still play an of import function in the economic system, particularly in Abu Dhabi. A immense existent estate and building and substructure roar, turning the fabrication base, and a comfortable services sector are assisting the United Arab Emirates diversify its economic system. Countrywide, there is presently more than 350 billion dollars worth of active building and substructure undertakings.
From the beginning of UAE constitution, the authorities applied the unfastened economic system policy that depends on the market system and the regulations of free economic system. The unfastened economic system policy gives the private sector the highest per centum of take parting in developing the national economic system, and this through using the production and service activities in the state without any barriers, and gives the companies the freedom to reassign there capitals and merchandises from exterior to the state.
Using this policy made a high growing for the economic system that can be measured through the Gross Domestic Production ( GDP ) for UAE. In 2006, the GDP was AED 599 billion from all sectors, and this sums increased by 135.6 % from 2001. In 2005 the GDP was AED485.51 billion, while in 2004 it was AED386.54 billion. So, the GDP for the UAE increased in the last periods in good sums.
While the rising prices rate in UAE was increased during the last period. In 2006, it was 10 % , compared with 6 % in 2005. However, in twelvemonth 2004, the rising prices was 4.4 % . And the chief ground for that increase is increase in the monetary values of rents during the last period.
As we know, the UAE economic system depends more on the oil sector as a chief beginning of income to UAE, but the authorities starts now to depend on other sectors ( non oil sectors ) as an alternate beginnings for income to the state, like: touristry, trade, existent provinces, industries and others. And the authorities success in this variegation of income beginnings, if 64 % from the national income for UAE in 2006 was from the non oil sectors.
Because all of the installations that the UAE authorities gives to investors, many investing chances open to the investors in all the sectors in UAE, particularly in petrochemicals, gas, fabrication, production, touristry substructure, progress technology…etc. Besides the authorities builds industrial metropoliss that exist in different topographic points in UAE that has all the services that need to get down working. From these metropoliss: Internet metropolis, Media metropolis, Knowledge metropolis, Medical metropolis and other metropoliss that established for investing intents. In add-on, the authorities makes free zones in UAE that belongs to more than 5000 companies, which presents 80 states from the universe, in order to function the local market and gulf market. Jabel Ali Free Zone ( JAFZA ) is one from these zones that successful in supplying goods and services. This zone provides three types of licence: general licence, specific licence, and national industrial licence, and these licences are valid while the company ain assets in the zone. Besides the companies in this metropolis can convey labours from different topographic points in a low cost.
For that, the volume of direct investings incoming to UAE increased during the last period, this volume was estimated at 30.79 billion AED in 2006, compared with 40 billion AED in 2005, and around 36.7 billion AED in twelvemonth 2004. For that, the UAE ranked 24th worldwide of the public presentation of the foreign direct investing inflows into the state within an index prepared by the United National Conference on Trade and Development ( UNCTAD ) . From other manus, the UAE ranked twenty-fifth worldwide with UNCTAD gauging for the volume of foreign direct investings outflows from UAE to outside, it was 8.51 billion AED in 2006, compared with about 13.76 billion AED in 2005, and around 8.1 billion AED in twelvemonth 2004.
All the sectors in UAE have growing in the last period, but there are some sectors that growing more than the others, the highest growing was for Automotive, Food and Drink, Freight Transport, Infrastructure, Telecommunication sectors.
The oil sector is the must of import sector in UAE, after the discovering of the oil in 1962, and the UAE authorities depends more on this sector through the last period, because its aid the authorities to bring forth more grosss particularly after the monetary values of addition in the last period. The chief bulk of oil in UAE is located in Abu Dhabi, with a per centum of 94 % of the sum, and this sum was doubled during the last decennaries.
Industry and fabrication:
Over the last old ages, the UAE authorities concerns in variegation income resources for the state, off from the gas and oil. The authorities invested in this industry more than $ 6.8 billion to get down, at started to turn quickly till it go the most of import sector in UAE that face the oil sector. This sector besides concern on the production of chemical and plastic… etc. the constitution of the free trade zones in UAE helped in bettering this industry. Industries that show large growing in are: cement, aluminium, and building.
This sector besides considered an of import sector for UAE, because its take a large portion in constructing the substructure in UAE, like balding undertakings, industrial, residential and commercial… Etc. So, the cement and natural stuff continue turning and develop during the recent and following period.
The touristry sector in UAE was grown quickly in the last old ages, and this is because of the many festival and metropoliss that done in UAE to promote the touristry. Dubai is the most popular in the universe for touristry between the other Emirates in UAE. From the chief activities that occurs in UAE: Equus caballus races, desert campaign and others. Near to that, there are some undertakings that done to promote touristry in UAE, like Al-Reem islands, Palm Island…Etc.
It was the find of Oil which has shifted the UAE to the industry age, and stayed for a long period to be the chief beginning of financess and exports of the United Arab Emirates. But recently, the authorities of UAE adopted a variegation policy in order to depend on other sectors in the economic system as a beginning of fund as listed and discussed above.
Furthermore, we can see that the Free Zone countries has played a really effectual and critical in pulling companies ( particularly foreign companies ) and this is due to less disbursals considered in such countries. And this helped in making a concern environment from different countries. All of this helped to the addition of the figure of companies to make in 1999 to around 1700 companies using about 145000 with estimated investings of 14 billion AED.
SWOT Analysis for UAE Economy
The UAE economic system has many positive points that make UAE economic system strong, and we can sum up these points in the followers:
UAE using the unfastened economic system policy.
The really of import location.
UAE ranked 6th between states that export oil.
Polices and processs that the authorities apply to back up the economic system.
Provide different installations for investors ( local and foreign ) , like: no limitations on the foreign currencies, competitory import fees ( 4 % ) , no revenue enhancements on the personal and companies ‘ income ( except oil companies and the subdivisions of foreign Bankss ) and other installations.
The authorities offers many investing chances for investors in all the sectors.
The authorities builds many industrial metropoliss and free zones in different topographic points in UAE that has all the services that need.
The UAE economic system failings are summarized in these points:
Fiscal Frauds in UAE economic system from reassigning money and no limitations in loans.
UAE currency is linked with the US dollar, and this cause a alteration in the value of the UAE Dirham as the alteration in the US dollar.
Legal system tie to governing elite
The UAE economic system has many chances, because it ‘s now in growing period. We can sum up the chances in these points:
The state has the chance to alter from depending on oil as a chief beginning of financess to other beginnings ( non-oil sectors ) .
The state has adequate financess to better all the sectors.
To export its merchandise to outside because of the low production cost in UAE.
The higher rising prices.
The uninterrupted changing in oil monetary values.
Political environment in the country that can consequence on the foreign investings.
UAE Macro-Economic Trend
This is a chart of tendency of gross domestic merchandise of UAE at market monetary values estimated by the International Monetary Fund ( IMF ) with figures in 1000000s of AED
( per 1000000s of AED )
( 2000=100 )
Per Capita Income
( as % of USA )
Sing the buying power para comparings, the Dollar is exchanged at 3.65 AED. The norm of rewards in twelvemonth 2007 around 210-254 dollar per twenty-four hours
In twelvemonth 2003, the United Arab Emirates produced around 2.3 million barrels ( that means they produce about 370,000 m? ) of oil per twenty-four hours. Abu Dhabi produced about 85 % of the sum, while Dubai, and Sharjah to a much lesser extent, bring forthing the remainder. Estimates say that Dubai has less than 10 old ages of oil left at current production degrees. However, Sharjah have some gas militias staying.
Recently, UAE concentrated more on industry, where the major additions in imports occurred in manufactured machinery, goods, and transit equipment, which together accounted about 80 % of entire imports. Another of import foreign exchange earner ; Abu Dhabi Investment Authority, which is control most of the investings of Abu Dhabi ( the wealthiest emirate ) . This authorization manages an estimated 360 billion dollar in abroad investings and the entire plus of this authorization estimated by 900 billion dollar.
More than 200 companies working at Jebel Ali in Dubai. Jabel Ali includes a deep H2O port and a free trade zone for fabrication and distribution in which all merchandises and goods for re-export get 100 % responsibility freedom. The most of import power works with associated H2O desalinization units, a steel fiction unit and the aluminium smelter are outstanding installations in Jabel Ali. Nowadays, Jabel Ali undergoing enlargement, with subdivisions of land set aside for different sectors of industry. A really big international rider and lading airdrome ( Dubai World Central International Airport ) with associated logistics, fabrication and cordial reception industries are planned to set up.
United Arab Emirates requires at least 51 % local citizen ownership for all concerns runing in the state as portion of its effort to put local Emiratis into leading places, but this jurisprudence is non applied in free trade zone. However, this jurisprudence is under reappraisal and the bulk ownership clause will probably be scrapped, to convey the state into line with WTO ( World Trade Organization ) ordinances and processs.
As a member of the Gulf Cooperation Council, United Arab Emirates participates in the broad scope of Gulf Cooperation Council activities that concentrate on any economic issues. The engagement of UAE include regular development and audiences of policies covering investing, trade, finance and banking, telecommunications, transit, and any proficient countries ( such as protection of rational belongings rights ) .
Over the last five old ages UAE authorities expense has by and large been increasing ; although they did fall marginally in 2002. Between the twelvemonth 2004 and 2005 UAE authorities outgo grew approximately 15 % , transcending the 2 % growing in the lat old ages. From twelvemonth 2000 to twelvemonth 2002 UAE authorities grosss decreased and as a consequence of that the authorities ran a budget deficit from 2001 to 2003. A autumn in oil grosss combined with coincident grow in authorities expense, on subsidies, existent estate developments and transportations, meant that the spread between grosss and outgos increased. However, from twelvemonth 2003 to twelvemonth 2005, the authorities ‘s grosss have really been increasing, and as a consequence the authorities has converted the budget deficit ( from twelvemonth 2003 till 2005 ) into a excess.
Over the past five old ages the United Arab Emirates has been sing crawling rising prices ( 6.2 % in twelvemonth 2005 ) . Some sectors, such as the lodging and adjustment sector, rising prices becomes more of a job and may get down to halter the growing of economic if the crawl persists. As a consequence of that, authorities and governments must take all the needed processs and policies to forestall any excess additions in rising prices and to restrict the potentially harmful economic effects that it may bring forth.
From the above, we can clearly see to which extent the economic system of the UAE is strong and has been able to turn out is its presence in the globalized universe and shifted from being more dependent on one beginning which is Oil, to more being a diversified economic system depending on more beginning on the economic system such as touristry, fabrication, free zone countries… etc
During the last five old ages, UAE has been able to turn in an increasing mode and hence pulling more investings and capital, believing in the safe environment and economic system that UAE and its authoritiess is supplying through assorted ways and tools.