Under the wise leadership of the country, UAE has been in the full spring for the last 40 years, said by Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum while giving an exclusive interview to CNN. It has been complete socio-economic transformation. It has been evolutionary economic development approach which has achieved elements of sustainability and strength. The ultimate goal is to be number one.
The Arab World has been under the clutches of political instability, anarchy, economic meltdown and societal unrest for the last two years. The ongoing European Union economic crisis and liquidity crunch has produced havocs in the macro-economic plans, monetary policies, political commitments and fiscal maneuverings of many member countries. Furthermore, the US economy is not in good shape.
On the other hand, UAE achieved 4.2 percent GDP in 2011. According to the Abu Dhabi Chamber of Commerce and Industry (ADCCI, 2011), GDP of the Abu Dhabi is expected to grow 4 per cent to Dh750 billion in 2012. It is forecasted that the public sector’s contribution to GDP would rise to Dh133 billion in 2012, up from Dh126 billion in 2011. ADCCI estimates also suggest that the contribution of the private sector to GDP will increase to Dh232 billion from Dh218 billion in 2011.
It is hoped that its diversification policy would bring more dividends in the 2012 as percentage of GDP. Oil’s revenue contribution in national GDP was 70 per cent in 1971 and now is reduced to only 29 per cent in 2010-2011. Dubai Economic Council study (December 2011) titled “the document of the union era” claimed that the UAE’s GDP is expected to reach at Dh1.248 trillion in current prices. It was Dh6.5 billion in 1971.
The United Arab Emirates macro-economy has been achieving new targets in every sector. There is no liquidity crisis in the UAE. Most of the countries faced huge budget deficits around the globe whereas; the UAE secured huge surplus in 2011. According to recently published Dubai Economic Council study, 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.
The Arab World suffered badly in terms of budgetary deficits, lay-off, unemployment, poverty, and outflow of capital i.e. $50 billion during the 2011. Safe heavens fell sharply and the UAE being the one of the ideal destination of investments benefited most of with the crippling situation and received bulk of foreign direct investments (official data of the economic ministry showed that UAE has attracted more than $73 billion FDI since 1971) from other regional countries battling out for their survival during 2011. Global stock markets have dipped close to record lows but the UAE bourses outperformed the regional as well as global markets during 2011.
Furthermore, the UAE emerged as the largest capital exporter in the region and the 30th top investor in the world and it has pumped over $53 billion into foreign markets during the last twenty years.
UAE foreign exchange parity remained lucrative, stable and strong. During 2011, where EURO touched its lowest ebbs and US Dollar weakened further along with other reputable international currencies the UAE dirham has been gaining steadily against the euro and South Asian currencies in the second half of 2011.
According to recently published report of the UAE central bank, the country’s currency has gained 18.61 per cent against the Indian rupee in 2011 and 2.34 per cent euro. It has gained 0.35 per cent against the British pound, 0.69 against the Australian dollar, 2.61 per cent against Swiss franc, and 4.03 against Japanese yen over the past few months which shows its prudent monetary policies and strong banking industry. According to the report, UAE commercial exchange was at Dh13bn in 1971 which would reach to Dh1.73trn in 2011.
Big banks in Europe, USA and around the globe were perished forever. The ghost of sub prime crisis started from the USA ultimately bankrupted mega financial corporations and banks in the Europe. People suffered badly from the spillover repercussions of global economic meltdown. Fiscal cuts were imposed on social nets and resultant was poverty, unemployment, poor health care facilities and low industrial production in the world. Global economic eclipse darkened brighter socio-economic prosperity during 2011.
But, UAE stood firm and its banking remained resilient. According to most recently published report of the UAE central bank (December 2011) the net profits of banks operating in the UAE registered 11.3 percent increase during first ten months of this fiscal year to reach AED 24.98 billion.
Central Bank figures (2011) showed that 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.
According to a international trade agency (December 2010-11) the UAE 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 preliminary statistics released by the Federal Customs Authority (FCA) verified UAE’s non-oil foreign trade has been achieving new targets during the first seven months of 2011 compared to the same period of the previous year. It indicates that UAE non-oil foreign trade has grown by 23 per cent compared to the same period of the previous year as total non-oil Foreign Trade has grown from Dhs426 billion during the first 7 months of 2010 to Dhs524 billion in the same period of 2011, i.e., an increase of Dhs98 billion. It further elaborated that imports has increased from Dhs276.3 billion to reach Dhs337.1 billion during the first 7 months of 2011. UAE exports witnessed tremendous growth by 45 per cent for the same period with an increase from Dhs44.5 billion to Dhs64.7 billion.
The report upholds that UAE total foreign trade in July, 2011 valued YoY Dhs79 billion compared to Dhs52.1 with an increase of 28 per cent. July Imports, in turn, hit YoY Dhs52.1 billion with an increase of 31 per cent. Exports achieved YoY Dhs10 billion with an increase of 51 per cent. Yet, re-exports recorded a YoY increase of 10 per cent to hit Dhs16.9 billion.
Global property markets were not in the pockets of positiveness. During 2011, the euro-zone economy was in turmoil and stock markets too on a roller coaster due to which prospects of healthier property markets remained subdued. The UAE real estate industry comparatively outclassed other competitors during 2011. The government initiated different meaningful policies to make it more attractive and safer. According to global land registry and National Association of Realtors (2011) the regional as well as global housing affordability conditions are at a record high and there is a pent-up demand and the UAE housing industry should also benefit from pent-up demand. Many mega real estate projects have been completed in UAE which would provide stabilization factor in this sector in the days to come.
Strategic Vision Abu Dhabi’s 2030 stand for further diversification of economy, better higher education, entrepreneurism, research, development of small to medium-sized businesses and knowledge-based economy would be instrumental to achieve its desired goals in the future.
According to International Energy Agency (2011), the UAE will increase its renewable energy up to 7 percent by the year 2020. The UAE Foreign Minister, Shaikh Abdullah bin Zayed Al Nahyan stated that the UAE will be a world leader in renewable energy. Despite horrible accident at Japan’s Fukushima Daiichi nuclear plant, the government of UAE followed it’s most advanced, transparent, open, reliable and viable nuclear program in the region/world as labeled by International Atomic Energy Agency (IAEA). Even nuclear regulatory body has also been institutionalized. Diversification of energy mix is one of the main pillars of UAE future energy policy.
The UAE is leading the GCC and Middle East and North Africa (MENA), in the development of renewable energy. It pursued comprehensive renewable energy policies in shape of Masdar City, the world’s first carbon neutral zero waste city, the annual World Future Energy Summit, IRENA’s headquarters, the annual Zayed Award for Future Energy, creation of Department of Energy and Climate Change Affairs and environment-friendly legislations along with building codification. Shams 1 solar plant is a remarkable addition.
Diversification drive can also been seen in the field of small and medium enterprises. UAE government introduced many measures in terms of providing business-investment friendly policies, loaning, infrastructure, training and formation of a new Development Bank. Now, SME sector is contributing its share in its GDP in a larger way.
UAE retailer confidence was among the best in the region and the world during the 2011. Despite global downturn and financial crisis, the retailer confidence of the UAE remained enacted and robust. More and more international brands landed in the UAE and benefited from higher retailer confidence.
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.
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. Aviation, tourism, seaports, and commercial cargos played tremendously during 2011. A record number of tourists traveled in UAE being the most comfortable, service-oriented, attractive and cheapest destination. UAE welcomes more than 13 million visitors in a year which makes its hotel occupancy highest in the region. There was a surge in the number of tourists from the GCC to Dubai and Abu Dhabi. Both emirates experienced growth in the number of hotel guests over last year. Abu Dhabi is forecast to have hosted about 2 million guests in 2012.
Media, public relations industry, event management companies, advertising agencies, telecommunication, science & technology and sovereign wealth funds maintained their positions and performed well. Moreover, UAE industrial base was expanded and further diversified. 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. Mega projects of industrialization are being carried forward i.e. Emirates Aluminium, a joint venture between Mubadala Development and Dubai’s Dubal and Emirates Steel, the country’s biggest steel-maker, is also forging ahead with a $500 million expansion that it expects to complete next year.
Social development is must for achieving sustainable economic growth that is why right from its inception; UAE has been giving priority to social development with a balanced approach. In every federal budget social development carries importance and substantial allocations. Even its federal budget 2012 allocated billions of funds for the social services, including health care, education and housing (47 per cent of the total budget i.e. Dh 41.4 billion (US $ 11.2 billion). Higher education, received 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. According to United Nations assessment, UAE would be the first country to achieve Millennium Development Goals (MDGs) in the GCC and MENA region.
UAE further democratization drive (2nd Federal Council Elections was held during September, 2011), women empowerment policy, persisted inter-faith harmony principles, global humanitarian assistance mechanism, and balanced foreign policy all gear towards a brighter, prosperous, stable and strong country. Its armed forces are the custodian of nation’s pride and sovereignty and they are doing great job in times of war and peace.
Keeping in view UAE splendid achievements in all spheres of life, it is crystal clear that UAE has been in spring and will remain in “spring”. It has achieved diversity and stability. Sand dunes, tents and small forts have been restructured in commercial hubs, business centers, expos and world’s tallest buildings. Sandbanks have been transformed into safe heavens and law and order has been one of the main priority due to which even dignitaries can walk without any security sharing. Bedouins have become shining starts of corporate world. UAE is the homeland where dynasties and dignities live and operate together.