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United Arab Emirates Macro-Economy 2010: A Review

Mehmood-Ul-Hassan Khan

Most recently the central bank of the UAE published a report (January 2011) in which it said that the country’s GDP has crossed Dh1 trillion mark in 2010 due to rigorous diversification of macro-economy, rapid industrialization, small and medium enterprises contributory role, infrastructure, trade, service sector and tourism. In the ongoing global economic and financial crisis the United Arab Emirates economy was one of the few countries to achieve steady and sustainable economic growth. Confidence of the local businessmen and foreign investors along with the persistent policies of the government played very important role in the socio-economic achievements of the UAE in 2010. Now, its marco-economy has noticeable diversification, vibrancy and self-reliance and propsects are very bright even for the 2011.

Economic Development

Right from the beginning, the visionary leadership initiated many mega projects and introduced effective policies for the betterment of its people. The UAE Government Strategy 2011-2013 and the UAE Vision 2021 are the two master pieces policies of macro-economic development which is not confined only to social, cultural, health, schooling, infrastructure, communications, and rural development. Both these major policies will deal the enhancement of collaboration between federal and local authorities, delivering high quality services, consumers and customer satisfaction, good governance and human resource management.

The world economic crisis 2008 affected the Gulf economies and the UAE is not any exemption but timely paradigm shift and institutionalization of important policy adjustments of the country succeeded to lessen its multiplier economic ramifications.

Foreign Direct Investments

According to UN statistics (December, 2010) UAE has become ideal and attracted more than $73 billion as foreign direct investment (FDI) since it was created nearly four decades ago to emerge as the second top capital recipient in the region. Cumulative FDI flow into the UAE totaled around $73.4 billion. Investment, business and the last but not the least people’s friendly policies are contributing positively to seek greater inflows of the FDIs in the country.

Innovation-Driven Economy

According to the latest Global Competitiveness Report (2010) by the World Economic Forum, UAE has been included in the most advanced stage of “innovation-driven economies” in the world for the second consecutive year for its technological readiness along with others pillars of WEF. Moreover, UAE ranked “third” in “government provision of high technology products”. Again, according the latest report of the WEF (2010) UAE ranked “third” in the world for quality of infrastructure. UAE has biggest Airports, biggest Cargo Terminal, Tallest Buildings, and other wonders of the modern age. Moreover, the UAE has been ranked among the top 10 countries in more than 18 indicators of competitiveness globally, and has reached an advanced position among the 139 countries assessed by the report.

(a) Prosperous Country

According to the London-based Legatum Institute (September, 2010), the UAE is the top-ranking Middle Eastern country on the Prosperity Index by taking into account both economic growth and citizens’ quality of life.

(b) Second Largest Economy in the Region

According to Sultan Bin Saeed Al Mansouri, Minister of Economy, despite the UAE’s small size and population it has the second largest Arab economy in the region where the gross national product reached Dh914.4 billion in 2009 and is confidently expected to cross the one trillion dirham mark by the end of 2010.

(c) Diversification of Economy

The key macro-economic indicators of the UAE provide clear evidence of the success of its government’s policy of economic diversification. In 1971, 70 percent of GDP came from the oil and gas sector. Accorirdng to the Federal Customs Authority (FCA) the UAE non-oil foreign trade maintained a sturdy growth of 11.5 per cent Y-o-Y till last October. The statistical data confirmed that the value of UAE non-oil foreign trade in the first ten months of 2010 jumped Dhs62 billion to Dhs605.4 billion from Dhs543.2 billion in the year 2009.
The Ministry of Foreign Trade (September, 2010) revealed that the UAE has been the top global re-exporter of rice over the past 5 years (2005 – 2009). Moreover, The data also indicated that the industrial sector increased by about seven per cent to Dh127.6 billion in 2010 from Dh119.2 billion in 2009, raising its contribution to GDP to around 12.8 per cent last year, the second largest component after oil.

(d) Effective Monetary and Fiscal Policies

Thanks to the policies taken by the government such as guaranteeing bank deposits and pumping of Dh120 billion in the domestic banking industry in order to support the banking sector, the United Arab Emirates’ national economy has proven its strength and competence in dealing with the repercussions of the economic crisis. Furthermore, the UAE ranked 20 at the WEF (2010), for the countries which have achieved the best financial development in 2009.

Sultan bin Nasser Al Suwaidi, the governor of the Central Bank of the UAE, that its country’s banking industry is strong and stable. According the latest report of the central bank of the UAE (2010), the overall performance of its banking sector is positive, stable and sustainable. Standard & Poor’s believes that the UAE authorities have a strong incentive, as well as willingness and capacity, to preserve the stability of their banking sector. The Central Bank of the UAE said that the country banks’ assets continued to rise and have reached to Dh1.6 trillion at the end of November 2010. Its banking assets increased 7.5 per. The growth in total bank assets means that there is liquidity in the market and no fear of credit crunch.

Steady Progress in Millennium Development Goals (2015)

The leaders of the UAE have already initiated diversified but integrated policy measures to achieve its MDG (2015). All the positive indicators in education, health, housing and social welfare indicate that the UAE is rightly placed on the right path to achieve all the MGDS before 2015. They have already introduced effective and people friendly policies to increase employment opportunities. They have adopted holistic strategies to provide every possible basic necessities of life to its people. They have relaxed its immigration policies for the benefits of many developing countries around the world.

Selected MGDs

MGDs indicators UAE Achievements

Universal Primary Education:
The net enrolment rates for grades 1-5 is 98 % in 2005, which suggests 100% target ratio is achievable by 2015. The literate rate of 15-24 years is 98.55% in 2004. The number of government schools has increased from 1,256 in the 2007-2008 to 1,350 in the 2008-2009 with the number of students increasing from over 600,000 to more than 700,000. The number of accredited universities and institutes, both government and private, having reached 64.

Reduce Child Mortality:
In 2006, there were 33 government hospitals in the country. In 2009, the number had increased to 40. There are 115 primary health care centres, 67 health centres and 11 primary school health centres in the UAE. It is ranked No. 1 in the Gulf region by providing all possible health care facilities, medication to its people

Ensure Environmental Sustainability:
It has already initiated effective policy measures to protect the environmental sustainability.

Concluding Remarks

Keeping in view all the important indicators of the macro-economy of the UAE it seems that it is strong, stable and sustainable. Its society is articulated and educated and enjoys with all the possible facilities of education, health, housing and law and order. Its culture is dynamic with full of life which combines traditions with modernity. It has become hub of foreign direct investments, trade, service sector and tourism. It is hoped that successful implementation of Government Strategy 2011-2013 and the UAE Vision 2021 would bring all the desired results in the days to come.

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