By Mehmood-Ul-Hassan Khan
Despite regional socio-economic turmoil in the Middle East, series of debt packages in the Euro-zone and weak economic recovery prospects in the USA, the macro-economy of UAE is stable, strong and sustainable. Global high food prices, conflicting interest rate management, and inflationary issues in the region and around the globe are not affecting the booming economy of the UAE and its all major economic indicators are positive. Even its financial and banking sector is in good shape and there is no credit liquidity crunch in the markets.
Different estimations of GDP
According to Sultan bin Saeed Al Mansouri said the UAE’s gross domestic product (GDP) was expected to grow between 3 and 3.5 per cent in 2011. According to him inflation will be under control. It will be in range of 1-1.5 percent. Whereas, the UAE central bank governor forecasted the economy to grow by 4-5 per cent in 2011. Trade, tourism and financial services would be driving force for its economy in 2011 and onward.
Salient features of macro-economy
Industrial productivity is increasing day by day. Non-oil trade percentage in GDP is getting bigger and bigger. High inflows of foreign direct investment reflect the high investor’s confidence. Tourism has seen an increase so far in the first four months of this year. Small and medium enterprises are making inroads in the ongoing socio-economic prosperity march of the UAE.
HCSB bank’s Trade Confidence Index (TCI)
According to latest HCSB bank’s Trade Confidence Index (TCI), UAE (2nd position) has achieved an advanced global ranking over the next six month period. The ranking verifies the country’s important commercial strength and the government’s diversified but integrated efforts to boost the competitiveness of its commercial sector. According to latest reports of the central bank UAE foreign trade would be increased by 20 per cent in 2011. It seems that policy initiatives taken by the UAE government in 2008 is paying the dividends now.
According latest report of the HSBC the UAE remains one of the most positive nations for trade confidence. Furthermore, UAE traders still report the highest levels of intra-regional trade, with 64 per cent of respondents reporting trade with the Middle East as their primary region for growth. It also shows that trade volumes will be high despite the volatility experienced in the region.
Positive growth in non-oil trade
According to the recent report of the UAE Federal Customs Authority (FCA) (March 2011), the growth rates of UAE non-oil foreign trade recorded a 22 per cent increase in January 2011. It showed that the UAE non-oil foreign trade jumped Dh12.6 billion to Dh70.2 billion from Dh57.6 billion in the same period last year. It also indicated a 21 per cent rise in imports to Dh46.4 billion as compared to Dh8.3 billion in January 2010. Moreover, the exports registered a substantial growth of 32 per cent during to Dh7.5 billion from Dh5.7 billion in January 2010. Similarly, re-exports witnessed a year-on-year growth rate of 20 per cent to Dh16.6 billion from Dh13.6 billion. The comparative study of the statistical data shows that UAE economy is gaining momentum.
The total volume of UAE non-oil trade in terms of weight in January 2011 reached about 7.1 million tonnes, including 4.4 million tons of imports, 1.9 million tons of exports and 829 thousand tonnes of re-exports. Thus, the average weight of imported, exported and re-exported shipments and consignments dealt with by the different customs ports for the same month amounted to about 29.7 thousand tons per day on the basis of official working hours (8 hours for 5 days a week), at an average of 3.7 thousand tons per hour.
UAE-GCC non-oil foreign trade
According to the FCA data the total value of UAE-GCC non-oil foreign trade reached Dh4.6 billion in Jan 2011, with Dh1.8 billion imports, Dh980 million exports and Dh1.8 billion re-exports. Saudi Arabia maintained its first rank among GCC region’s trading partners with a total value of Dh1.75 billion. It further pinpointed that the total foreign trade volume of the UAE with the Arab countries in terms of value amounted to Dh8.2 billion in Jan. 2011, with Dh3.3 billion worth of imports, Dh1.6 billion worth of exports and Dh3.2 billion worth of re-exports.
The preliminary statistical data of January 2011 showed that gold took the first position among imports, with a value of Dh7.4 billion. It was followed by diamond with Dh5.4 billion, then cars (Dh2.5 billion), ornaments and jewelry (Dh1.9 billion), telephone sets (Dh877 million), in addition to spare parts and accessories of tractors, vehicles for special uses, passenger vehicles and goods vehicles (Dh550 million).
Commodity trade (exports)
Commodity Amount (Dh)
Gold 3.9 billion
Ethylene polymers 300 million
Petroleum and other oils 204 million
ornaments and jewelry and related parts 203 million
Source: FCA (2011).
Commodity trade (re-exports)
Commodity Amount (Dh)
Diamond 6.1 billion
Cars 1.1 billion
Telephone Sets 455 million
ornaments and jewelry and related parts 425 million
Source: FCA (2011).
The above two tables clearly confirm that UAE trade is booming and positively contributing its share in GDP. The total trade volume of UAE free zones and markets in January 2011 amounted to Dh604 million.
Concluding Remarks
Resilient macro-economy of the United Arab Emirates endorses the wise policy initiatives of its leadership. Its economy is not based on any speculated theme of free market arena. Many reports of World Bank and international monetary agency confirm that there is no fear of market burst in the UAE as projected in the Western media. Its economy is dynamic, vibrant and diversified and moreover, is based on strong and solid foundations.