UAE macro-economy despite ongoing waves of the Arab Spring, European Union economic downfall, the slowdown of the UAE economy and the last but not the least, persistence global economic recession and financial crunch is achieving tremendous standards.
The wise leadership continuously and rigorously institutionalized economic and financial reforms and made business and investments friendly policies due to which, now the UAE has become one of the ideal destinations of foreign direct investment, tourism, re-exports, innovation and above all hub of all kinds of business activities in the region. According many officials reports, the Arab Spring could not affect the ongoing socio-economic march of the UAE and succeeded to attract even more inflows of FDIs and welcomed more.
Day by day and year by year, its macro-economy achieved elements of stability and sustainability since 1971. The robust socio-economic development revolutionized the every sphere of its national life i.e. politics, economics, society and general national perception.
Recently, the UAE celebrated its 40th National Day which witnessed unparallel transformation in terms of achieving Millennium Development Goals (MDGs), higher education (student enrollment in the universities is highest in the region), health care facilities, housing, clean drinking water, and the last but not the least, GDP % .
According to recently published Dubai Economic Council study, dubbed “the document of the union era” the UAE’s GDP is expected to peak at Dh1.248 trillion in current prices in the current fiscal year to maintain its position as the largest in the Arab world after Saudi Arabia’s economy. The nominal gross domestic product of the UAE was Dh6.5 billion in 1971 which has surpassed at Dh1.248 trillion.
According to this report the real GDP is forecast to grow by around 3.3 per cent in 2011 and 3.8 per cent in 2012 compared with around 2.3 per cent in 2010 but economic ministry projected GDP may reach to 4.2 % during the 2011. The report projected that UAE nominal GDP has raced by nearly 34 per cent annually over the past five years which has pushed the country’s per capita income to a projected Dh174,000 from Dh100,000.
Due to rigorous diversification of economy policy, UAE’s income from oil exports or hydrocarbon sector’s contribution to GDP has substantially declined during the past five years. It was 70 per cent in 1971 and now its contribution to GDP reduced to only 29 per cent in 2010.
The report further versified the dividends of UAE diversification policy due to which non-oil GDP hit an all time high of around Dh749bn in 2010 compared with nearly Dh511bn in 2006. “It reduced UAE heavy reliance on oil sector and saved it form the price volatility and persistent instability in the global economy. Mass industrialization is also contributing remarkably in the national economy of the UAE. Small and Medium Enterprise industries are making inroad in the economy of UAE and providing new opportunities of employment generation and foreign exchange.
The current published report showed the UAE’s fiscal balance would record a surplus of 10.3 per cent of GDP in the current fiscal year and 9.2 per cent in 2012 against seven per cent in 2010. According to the report, UAE commercial exchange was at Dh13bn in 1971 which would reach to Dh1.73trn in 2011.
The UAE was ranked the 13th largest exporter with exports of around US$235 billion while it came 18th in imports which stood at US$170bn in 2010. The report added that the country’s exports and imports accounted for almost two and 1.4 per cent of the world’s total exports and imports respectively.
The regional economists are of the view that the surge in the UAE economy during the last 40 years was a result of sound planning and rigorous policies, high public spending, massive investments by the government and private sector, and a surge in foreign direct investment because of improved investment laws and strong economic performance.
Official data of the economic ministry showed the UAE has attracted more than $73 billion FDI since 1971 and successfully emerge as the second top capital recipient in the Arab World. Cumulative FDI flow into the UAE totaled around $73.4 billion, nearly 26 per cent of the combined foreign capital received by the six-nation Gulf Cooperation Council (GCC), which controls over 40 per cent of the world’s oil. Furthermore, the UAE emerged as the largest capital exporter in the region and the 30th top investment in the country has pumped over $53 billion into foreign markets during the last twenty years.
Different economic research reports and official data showed that the public spending one of the key elements of macro-economy has steadily increased by at least 10 per cent annually during the last ten years. In 2009, the UAE boosted public spending to its highest ever level of Dh289 billion in 2009.
UAE banking sector is stable, strong and resilient and it is continued to dominate the regional markets in the Arab world with a large rise in its bank assets over the past two years. Central Bank figures showed the combined assets of the country’s 23 national banks and 28 foreign units swelled to an all time high of Dh1,584 billion at the end of September compared with around Dh1,519 billion at the end of 2009 and nearly Dh1,456 billion at the end of 2008. Moreover, the banks also controlled the largest capital base in the region, estimated at nearly Dh255 billion. UAE banks also dominate in loans and deposits, which stood at Dh1,038 billion and Dh1,013 billion respectively in September 2010.