Mehemood Ul Hassan Khan
Despite regional economic meltdown and global weak recoveries the United Arab Emirates (UAE macro-economy has performed well. Its macro-economy is strong and stable. It has achieved the elements of sustainability based on diversification drive, active role of private sector and the last but not the least, export-oriented model.
High GDP Projection
According to the latest published report of the ministry of economy the UAE’s real GDP is projected to grow by up to four percent in 2013, strongly supported by robust tourism, trade, industry, strong recovery in real estate and service sector. Furthermore, in current prices, GDP is expected to reach to a record high of Dh1.39 trillion during 2013 from an estimated Dh1.33 trillion, an increase of about 4.5 per cent. The International Finance (IIF) report showed the UAE’s GDP reached to its highest ever level of around US$375 billion in current prices last year from US$352 billion in 2011, an increase of about 6.5 per cent. The 2012 GDP was more than double its level of nearly US$181 billion in 2006. Inflation has been successfully managed from a record high of 14 per cent in 2008 to below one per cent in 2011. Inflation in 2012-2013 would be around 1-1.2 per cent.
Dubai Department of Economic Development (March, 2013) report expects the economy to expand at 4 percent this year. Keeping in view, the figures for the first six months of 2012 the GDP may reach to 4.1 per cent during 2013.
The UAE economy has achieved an annual growth rate of 6 per cent during the past two decades, which shows the country’s competitiveness and economic growth. The Washington-based Institute for International Finance (IIF) appreciated the UAE strides in socio-economy development. According to its latest report, the UAE maintained its position as the second largest Arab economy in 2012 after its gross domestic product (GDP) swelled by US$23 billion in current prices. It has been retaining its the second largest Arab economy after Saudi Arabia for more than 10 years because of a steady and rapid growth in its GDP as a result of high public spending, a steady increase in private sector investment and oil productivity of oil sector. The report further showed the UAE’s economy accounted for more than a quarter of the GCC”s GDP of US$1.482 trillion in 2012 and nearly 14 per cent of the combined GDP of MENA countries.
Despite the massive increase in its population over the past years, the UAE maintained its position as one of the richest nations and the third in the Arab region, with its per capita reaching one of its highest levels of US$45,731 in 2012. The report estimated the UAE macro-economy to continue its rise to reach US$395 billion in 2013 and a record high of around US$410 billion in 2014.
Right from the inception, the UAE has been moving towards an export-oriented model. Its continued economic liberalization, reforms and policies has already transformed its economy to self-reliance and export-oriented model. The Federal Customs Authority (FCA) says that the UAE non-oil exports show a stable growth, confirming the good reputation of these exports in the global markets. It says the value of the UAE non-oil exports rose in the first nine months of 2012 to Dh135.7bn compared to Dhs84.4bn in the same period of the last year”. Moreover, the total foreign non-oil trade (minus the free zones trade) in the first nine months of 2012 surged by Dh99bn to Dhs783.5bn compared to Dh684.9bn in the same period of the last year.
According to the FCA statistics, gold has been the major item in the UAE export structure at a top of the major ten exported goods with Dh79.8bn, followed by ethylene polymers in the basic forms with Dh5.3bn, jewelry and jewels with Dh4.9bn, crude aluminum with Dh3.3bn, propylene polymers in the basic forms with Dh2.9bn, petroleum oils and oils obtained from bituminous minerals with Dh2.4bn.
The diamond came at the top of the major re-exported commodities in the first nine months of 2012 with Dh26.4bn, followed by jewels and pieces of jewelry with Dh20.3bn, cars with Dh11.1bn, phones including mobiles or other wireless networks with Dh8.3bn and fiber glass with Dh4.2bn.
Regions Non-Oil Trade Percentage %
Asia- Pacific Dh326.1bn 42
Europe Dh222.2bn 29
MENA Dhs110.6bn 14
America & Caribbean Dhs64.9bn 8
Western and Central Africa region Dh23.2bn 3
COMESA Dh20.8bn 2.7
Source: FCA (March, 2013)
UAE commercial diplomacy has achieved immense success in these years. It has already secured and consolidated strategic allies and business partners.
High Inflows of Foreign Direct Investments
Foreign Direct Investment (FDIs) is the life line for joint ventures and high exports. It is necessary for value-addition. It is must for even technology transfer. It abridges budgetary deficits. It promotes industrialization and activates the positive role of private sector in the national economy. It generates employment.
UAE open door policy has attracted high inflow ratios of FDIs. The government is taking the necessary steps to establish the rules that facilitate investments. Now, the UAE is ranked second among Arab countries attracting foreign investments in the last decade. According to the World Investment Report (2012) issued by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investments (FDI) flowing into the UAE amounted to $ 7.7 billion of the total amount of FDI to GCC countries, which was $ 26 billion in 2011. Now, many foreign companies and investors consider the UAE as a safe haven for investments because of its political stability and safe heaven for the investments. It also has a strong infrastructure and is considered a leading hub for trade, logistics and services in the region. It is highest connected country in the GCC and MENA too.
Moreover, the EC Harris Built Asset Consultancy’s “Infrastructure Investment Index”, which is a report that ranks 40 countries across the globe according to how attractive they are to infrastructure funds is ranked UAE 4th globally. It shows the UAE strong commitment towards economic facilitations and incentives for the interested businessmen and investors.
UAE: easiest Arab place for starting projects
Facilitation of doing business and staring of projects are must for rapid industrialization, attraction of FDIs and promotion of joint ventures in the country. In this regard, UAE government is doing its level best to provide every possible facility to all the interested businessmen and investors.
Most recently, the World Bank in its report titled “Ease of Starting Business Index” ranked the UAE THE easiest Arab place for starting projects. It is achieved because of UAE smooth procedures and simple tax system. It improved its ranking from 46 in 2012 to 22 in 2013 indeed a giant leap. The index, part of the “Ease of Doing Business Index” covering 185 countries, also classified the UAE as the top nation in the world in terms of paying taxes after it was ranked seventh in 2012. The tax sub-index covered total number of tax years, labour tax, total tax rate to profits, time needed to pay tax and profit tax, which was put at zero, indicating the UAE does not impose taxes on corporate earnings.
The index, published in the latest monthly bulletin of the Kuwaiti-based Inter-Arab Investment Guarantee Corporation (IAIGC), showed the UAE was ranked 13th in the world in terms of dealing with construction permits, seventh in getting electricity for the project, and fifth in trading across borders. UAE government is ready to take measures to further improve the investment climate, expedite procedures, allow full foreign ownership and issue a landmark debt law. The Ministry of Finance said last month the debt law, which will also tackle bankruptcy, has been drafted and would be approved soon.
High Performance of UAE Bourses
Stock Exchanges are at their lowest ebbs around the globe. Abu Dhabi-based Arab Monetary Fund (AMF) said the UAE bourses emerged as the star performers in the Arab world in the first few weeks of 2013, with the markets of Abu Dhabi and Dubai gaining more than $4 billion to offset a decline in most other regional exchanges. The bulk of the growth was witnessed in the bourses of the UAE.
Furthermore, Abu Dhabi Securities Exchange recorded the biggest rise in the region, with its market capitalisation surging from around $82.7 billion at the start of 2013 to $86.1 billion. Dubai’s market capitalisation grew from about $55.9 billion to $57.6 billion in the same period. This means the total increase in the UAE market capitalisation was $4.1 billion. Future prospects are healthy and positive as good results recorded by most banks and other listed firms last year.
Stable Consumer Confidence
The recent report (March, 2013) of the MasterCard has revealed the results of the latest MasterCard Index of Consumer Confidence, which indicates that Consumer Confidence in the UAE is steadily rising, with a score of 91.4 as compared to 86.0 in the previous edition of the Index released 6 months ago.
According to the report the consumers in the UAE are ‘extremely optimistic’ in their overall consumer confidence score, and are positive about all five indicators measured in the Index. When compared to the previous edition of the survey, consumers are more optimistic about
Indicators Present Pervious
Quality of Life 95.6 88.6
Employment 95.2 88.9
Economy 94.6 89.1
Stock Market 86.9 77.0
Source: MasterCard Report (March, 2013)
UAE: Tops in region in travel & tourism
UAE land of tallest building, unlimited sea places, grand hotels and infinite gifts/discoveries of the nature has topped once again in travel and tourism in the GCC and MENA. The Travel & Tourism Competitiveness Report 2013, released by the World Economic Forum (WEF) recent report has endorsed it. UAE has already built a cultural resource base, attracting both leisure and business travellers, with several and growing international fairs and exhibitions and increasingly diverse creative industries. Report titled “Reducing Barriers to Economic Growth and Job Creation” the UAE is blessed by a strong affinity for Travel & Tourism. Its world class international hubs for global air travel along with high standards of hospitality makes it one of the best destinations for the regional and international tourists. I addition to this, its effective marketing and branding campaigns, easy policy rules and regulations, foreign investments policy and the last but not the least, a liberal visa regime are the few factors of its achievements in the Felds of travel & tourism. The emirate’s tourism industry is set to receive 2.5 million tourists in 2013, up from last year’s record 2.3 million tourists.
UAE: Lowest rate of software piracy in Middle East
Due to its continuous reforms and regulatory bodies mechanism, the UAE has the lowest rate of piracy in the GCC and MENA. Microsoft and the International Data Corporation (March, 2013) acknowledges the UAE contribution in anti-piracy drive and institutionalization of laws. The rate of counterfeit software in the UAE was 37 per cent in 2011, the lowest in the region and better than the global average of 42 per cent.
United Arab Emirates macro-economy is stable, strong and sustainable. All the main indicators of its economy are healthy, positive and productive. Export-oriented model paves the way of higher foreign exchange. National drive of diversification of economy speeds us active participation of private sector, industrialization, manufacturing sector and above all lesser dependence on oil and gas reservoirs.
UAE pursuits of alternative/renewables are paying dividends. It is regional leader and global brand name in renewables especially in solar and wind energy mix. Service sector is at its peak and one of main contributors in the GDP. Banking industry is performing extraordinarily. A future prospect of UAE’s macro-economy is positive and healthy.