Mehmood Ul Hassan Khan
Despite recent global markets poor performance, the European Union ongoing weak economic meltdown and the US economy mediocre upward progress, the United Arab Emirates is making impressive socio-economic development since 2008. Regional political uncertainty did not affect its macro-economy.
It has been glorious 40 years of socio-economic turnaround. It has been achieving new standards in trade and commerce, technological superiority, inflows of foreign direct investments, and above all diversification of national economy. It has been paradigm shift in education, health, housing, drinking water supplies and the last but not the least quality life. Right from the beginning, it has been strides towards productivity, industrialization, developmental projects and business friendly policies.
According to official report the UAE’s GDP growth this year is expected to achieve 3.5 percent. Moreover, UAE’s GDP is expected to reach $386 billion (Dh1.41 trillion) this year, up from $360 billion (Dh1.32 trillion) last year. Institute for International Finance (IKIF), high oil prices and production boosted the UAE’s economy by more than $62 billion in 2011 in current prices and maintained its position.
UAE has succeeded to handle its outstanding public debt i.e. $252.9 billion due to its robust economic growth, high levels of exports, innovative economy, tourism, substantial contribution of service sector in the GDP and timely institutionalization of banking and financial reforms in the country.
Many international reports verify its stable and sustainable economic growth. According to the Global Competitiveness Report (2012) the UAE ranks first globally in terms of efficiency in fiscal policy. It is achieved due to its economic liberalization, knowledge based economy, exports and rigorous banking and financial reforms. Edelman’s Trust Barometer report says that the UAE also features high in global ranking on trust in government procedures, i.e. 78 percent level. Moreover, the UAE ranks the UAE 2nd in terms of credibility of government officials. It shows the utmost commitments of the government officials and high levels of transparency and accountability on the parts of its functionaries. The government its self and its functionaries are doing their best for achieving the desired goals of socio-economic targets. Another international organization/forum the World Economic Forum in its Global Competitiveness Report (2011-12) ranks UAE 27th out of the 142 countries. All these positive indicators endorses UAE advanced stage of economic development achieved with the combination of knowledge based economy, diversification policy and persistence business and investment policies.
The UAE also enjoys high global ranking in terms of per capita GDP, which amounts to $44,000. Inflation is also at its lowest ebbs i.e. 2.5 percent this year. The visionary leadership has already taken major paradigm shift in areas of education, health, housing, foreign trade, transportation and communications. It has initiated integrated legislation and laws that support growth and enhance investor confidence and develop non-oil sectors. It has built a suitable environment for the private sector and market competitiveness at both regional and global levels.
The IIF report (2012) showed the non-oil sector would drive growth in 2011-2012 as it would expand by about 3.5 per cent against oil sector growth of 2.6 per cent. Furthermore, the UAE’s exports of crude oil, gas, petrochemicals and other oil products could rise to nearly $92.6 billion next year from $88.2 billion in 2010. The rise is expected to widen the current account surplus to nearly $17.2 billion or around 6.4 per cent of GDP from $14.9 billion or 5.9 per cent of GDP.
According to official data, to accelerate the economic activities in the emirate and to counter global economic and financial crises the government increased public spending standing at around 31.3 per cent of GDP compared with 32.8 per cent in 2010. Analysts said spending levels could be higher in 2011-2012 due to a rise in nominal GDP.
The Arab Monetary Fund (AMF) published its report indicating that the UAE boosted public spending to its highest ever level of Dh289 billion in 2009 despite a sharp decline in oil revenue because of lower prices and production.
According to official data (April 2012), due to high rates of economic growth, the UAE achieved one of its highest levels of trade surplus i.e. $86.2 billion in 2011. While the current account balance also increased more than 10 percent of GDP. Abu Dhabi-based Arab Monetary Fund (AMF) says that foreign trade sector outperformed the other sectors of the economy and exports of goods climbed to an all time high of around $265 billion in 2011 while imports reached $179.3 billion. The exports boosted the country’s trade surplus by around 36 per cent from 63.5 billion in 2010. It further shares that the current account surplus is expected to have climbed to about $37.7 billion, or nearly 10.4 per cent of GDP.
According to official data and the figures of UN Conference on Trade and Development (UNCTAD), UAE has attracted more than $76 billion in foreign direct investment since it its inception. The report showed cumulative FDI flow into the UAE has totalled $76.17 billion, nearly 12.6 per cent of the overall Arab FDI inflow of $603 billion. The UAE, the second largest Arab economy, also accounted for nearly 24 per cent of the FDI flow into the GCC and 0.4 per cent of the world’s direct capital.
United Arab Emirates has succeeded to maintain its rapid socio-economic development since its beginning. Role of leadership has been facilitating and supporting on the different issues of national economy, production, business environment and laws.
UAE macro-economy achievements are stable and sustainable despite all hardships and global economic doom and gloom. It is not a castle made in the air. It is a unique economic model for progression, prosperity and persistence. It maintains strategic balance in all the sectors of the national economy. Establishment of different economic free zones, business and investment incentives with 100 percent government guarantee and above all active commercial diplomacy are the key actors of its rapid socio-economic development. Service sector is booming and contributes in a big way in the GDP. Small and medium enterprises is making inroad in the national economy and its share in the GDP is on the rise by each passing day. UAE once land of sands has become land of success.