On 2nd December 2011, the United Arab Emirates celebrates its fortieth National Day. UAE leadership jointly decided to form a federation in 1971 and worked collectively for the common socio-economic development of all the seven emirates. Economic liberalization, financial reforms, active participation of private sector, and business & investment friendly policies subsequently made United Arab Emirates as one of the leading emerging economy in the world.
The latest report of the World Bank and the International Finance Corporation (IFC) Doing Business 2012: Doing Business in a More Transparent World clearly show that the UAE has improved its global ranking by two to reach 33 in 2011. According to the latest Global Competitiveness Report by the World Economic Forum (WEF), 2011, UAE has been included in the most advanced stage of ‘innovation-driven economies’ in the world for the second consecutive year because despite ongoing global financial meltdown and increasing of public debts ratios around the world, UAE economy achieves sustainable growth.
UAE is now a tax free economy with no controls on the inflow or outflow of capital or profits and keeps the true spirits of a free market economy. Now, its macro-economy is strong, stable and sustainable. Even, ongoing Euro-debt crisis, deadly global economic recession and sever financial crunch could not pose any serious problem to its march towards greater socio-economic turn-around.
Right from the beginning, social development has been epicenter of UAE government’s policy. Successive leaders and especially, His Highness Sheikh Khalifa bin Zayed Al Nahyan, the Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum initiated effective social development programs and allocated substantial funds in the budgets throughout the UAE in order to pass the trickledown effects of robust economic growth to their populace.
Keeping in view the importance of social development the UAE government has already increased allocations for development expenditure in the provisional federal budget 2012. The social services, including health care, education and housing, accounted for 47 per cent of the total budget i.e. Dh 41.4 billion (US $ 11.2 billion). Higher education, will receive Dh 8.26 billion (US $ 2.25 billion) or 19.6 per cent, the bulk of which will be spent on plans to build new schools and other educational institutions and to upgrade the educational environment.
Now, their constant paradigm shift is paying dividends in shape of better education, health, shelter and clean drinking water facilities in all the seven federating units i.e. emirates. All reports of World Bank, IMF and United Nations indicate that UAE would be the first country to achieve Millennium Development Goals (MDGs) in the region. Its literacy rate is highest in the region.
Women empowerment drive has achieved splendid success. Now, women account for around 70 per cent of all university graduates in the country and fill around two thirds of government jobs. UAE has now four women members of the Cabinet and ambassadors. They are now air force pilots and armed forces recruits. Moreover, it has achieved new skies in advance technologies, development & research and human resource management. It has emerged as knowledge-based economy.
Since it inception, UAE has been following the holistic spirits to promote inter-faith harmony, tolerance, humanity and peace towards all nationalities due to which now it has become country of maximum foreign nationalities. There are more than 40 churches and cathedrals as well as to places of worship for other faiths peacefully exist in the UAE which endorses the vision of its leadership.
UAE attracts people of many nationalities for securing brighter future, availing better services and the last but not the least enjoying cultural diversity in a friendly environment. Even more than 1.4 million Pakistani expatriates are also working in the UAE. Now, it has become one of the ideal destinations for tourism in the region.
According to the latest report of the National Bureau of Statistics (October, 2011) the UAE economy is expected to grow by 4.2 per cent in real terms this fiscal year as compare to 2010. UAE’s nominal gross domestic economy is the second best in the region and reached to over Dh1 trillion in 2010 compared to around Dh250 billion in 2001. It is also the Middle East’s largest consumer market.
Most recently, the Institute of International Finance (IIF) stated that its economic growth is projected to remain resilient in the face of global economic upheavals and regional political turmoil. The IIF has forecast GDP growth of 4.4 per cent and 3.1 per cent for 2011 and 2012, respectively. Moreover, its non-hydrocarbon growth is expected to be supported by high public spending on infrastructure, including spending through government-related entities (GREs). According to the Dubai-based Emirates Industrial Bank (EIB), despite a slowdown in 2009 because of the 2008 global fiscal crisis, the country’s GDP in current prices has leaped by nearly 15 per cent annually over the past decade, one of the highest growth rates in the world.
Diversification drive of economy is now paying its dividends. UAE government’s constant support to industrial sector has made it UAE less reliant on revenue from its oil exports. Its non-oil foreign trade surged by 14 per cent in 2010, to Dh 754.4 billion (US $ 205.3 billion), compared to 2009. Exports increased by 27 per cent and re-exports registered 26 per cent upwards growth, with non-oil imports rising only by 8 per cent. Foreign trade has continued to rise throughout 2011. Prospects are even brighter in the years to come. The UAE also ranked 25th largest global importer of goods and 19th exporter in the world 2010 becoming the only Arab nation to be among the top 30 markets. The UAE’s commercial exchange reached at $405 billion, the largest in the Arab region in 2010.
Moreover, the UAE took the lead in terms of merger and acquisition deal volume in the Middle East and North Africa with 32 deals in 1H2011 compared to nine in 1H2010, resulting in a remarkable increase of 226 percent. Official data showed cumulative inflows of FDI into the UAE totalled $75.7 billion during 2000-2011. As for FDI outflow, the UAE emerged as the largest capital exporter in the Arab region, pumping nearly $52 billion into global markets during 2000-2009.
Oil and gas revenues now account for 30 per cent of GDP despite high oil prices at international markets. Now, manufacturing sector is active, healthy and productive. It is one of the leading sources of employment generation, exports and revenues. It is hoped that a strong manufacturing industry that meets the needs of the international markets will help protect the UAE from the continuing economic turmoil.
Tourism has become one of the fastest growing sector and accounts for more than 10 per cent of GDP. UAE welcomes more than 12 million visitors in a year which makes its hotel occupancy highest in the region. Its national airlines Abu Dhabi’s Etihad, Dubai’s Emirates and FlyDubai and Sharjah’s Air Arabia are making providing every possible facility of aviation.
Sable construction sector is contributing positively in the macro-economy. It employs 50 percent of the total labour force. According to official statistics, the share of construction and the real estate sector in Dubai’s GDP declined from 30 per cent in 2007 to 23 per cent in 2010.
Resilient banking and financial sector is providing essential inputs for survival and production. The IIF report (2011) indicated that the country has one of the strongest fiscal positions in the region. It projected total gross foreign assets of the UAE to continue rising to about $600 million by end 2012. It would result in an overall net external asset position of about $480 billion, equivalent to 130 per cent of 2012 projected GDP.
Most recently, the UAE has announced the establishment of the Emirates Development Bank, which has been set up to spur economic growth and improves living standards by providing finance for development projects and other initiatives.
Abu Dhabi’s 2030 which stands for further diversification of economy, better higher education, entrepreneurism, research, development of small to medium-sized businesses and knowledge-based economy would achieve its desired goals in the days to come.
The effective strategic vision of the United Arab Emirates holds the key of further strengthening of its socio-economic development, attracting inflows of FDIs and maintaining its free market economy status. Further diversification of the economy, development of Small and Medium Enterprises (SMEs), service sector, exports, and manufacturing are must to achieve the desired goals. Growth of renewable energy resources would be value-addition in the economy