GDP per capita..4
GDP growth rate..4
Statistics and Graphs .9
Works cited 14
The United Arabs Emirates (UAE) is on the Persian Gulf. Its position is such that it is found on the Southeast of the Gulf. It borders Oman and Saudi Arabia. It has a population of 7, 890,796 (2011) and its capital city is Abu Dhabi. UAE comprises of seven emirates with Abu Dhabi being the largest followed by Dubai. For over 30 years, the Arab federation has exploited oil reserves and exporting it for revenue. These reserves may take long before they get depleted. Most searchers argue that it will take up to more than two hundred years. The production of oil has impacted greatly on the United Arabs of Emirates economy. Initially it has contributed up to 35 percent of the GDP. However, in the recent years the Government opted to diversify the economy to reduce its dependence on oil and natural gas. In the vision 2030, the country projects its economy to be oil free.
The United Arabs Emirates is a member of the Gulf Cooperation Council (GCC) for the Arab states that are sources of oil and natural gas. The GCC consist of six country members of the Gulf Region. They include; Kuwait, United Arab Emirates, Oman, Saudi Arabia, Qatar, and Bahrain. The council was formed with a goal of special relations with the member states. The nearness of the countries geographically would lead to free trade and formation of favorable economic policies for the member states. The United Arabs Emirates being one of the six members has the potential to develop its economy deriving from the economic benefits of the GCC.
The Growth Domestic Product (GDP) for the United Arabs Emirates (UAE) for the year 2012 was $360 billion while it was $298 billion in 2011. The UAE’s GDP has generally been on an increasing trend since the year 1976 to date except for the period 2008 -2010. This great drop is associated with the world wide depression experienced after 3 decades of the Great Moderation during which economies experienced stability. The GDP in 2008 was at $314 billion while in 2009 it was at $270 billion. It started to regain in the year 2010 with $ 297 billion in GDP.
At the present, oil resources form 25 percent of the GDP. The hydrocarbons industry has a share of 40 percent in the GDP. Gains from the transport industry contribute a total of 7 percent of the UAE GDP. The industry has been observing an upward trend in revenues since 2009 attaining $ 8.1 billion in 2012. This is a growth of 8.5 percent annual.
United Arabs Emirates’ economy is getting less dependent on natural resources like oil as sources of revenue due to the diversifying other sectors for the economy. For instance, in 2012 the tourism sector contributed $52.7 billion to the GDP which was 14 percent of the total GDP, above the world trend of 9 percent. The tourism sector is further projected to increase further by 3.2 in 2013. The United Arabs Emirates is also developing the international finance. In connection with this, Dubai International Finance Centre was declared presenting 55.5 percent on foreign ownership. The Dubai International Finance Centre was offered without any withholding tax, freehold land an office space. The internet and media zones were also established. This presented 100 percent foreign ownership tax free on the office space. The stock market in the United Arabs Emirates was valued at a significant $109.9 billion. The diversification of the economy has lead to the economy has lead to the significant increase in GDP especially for the financial year ended 2012.
GDP Per Capita
In 2007 the GDP was at 34669.33 US dollars as compared to 21058.44 US dollars in the year 2012. The United Arabs Emirates GDP per capital represents 170 percent of the world’s average GDP. From history, United Arabs Emirates recorded an all time high GDP per capita of 49329.2 US dollars in December 1973 and a low of 20766.3 US dollars in December 1988. The United Arabs Emirates’ population is expected to rise from 4.8m in 2011 to an approximated 5.2m by 2015. This will see the GDP per capita rise to $74,999. The population increase is attributed to the increasing urbanization factor especially in Abu Dhabi.
GDP growth rate
The GDP in the United Arabs Emirates increased 4.9 percent in the year 2012 from 2011. Comparing the GDP growth of the United Arabs Emirates for the past 12 years (ranging from the year 2000 to the 2012), there has been an average annual growth rate of 4.65 percent. During the 12-year period, the highest GDP growth rate of 9.80 was recorded in 2006 while the lowest rate was -4.8 experienced in the year 2009 toward the beginning of 2010. After 2010 the GDP growth picked up and has seen a great increase. The following year the GDP grew approximately by 5.7 percent, up from 4.4 percent in 2010 due to high oil prices. Since then, diversification of the UAE economy has resulted into much reduced oil and gas based yield of 25 percent. The UAE has a high annual trade surplus. This has enabled the country to develop hence increasing the GDP and thus a high GDP growth rate. The good economic performance of the UAE can also be linked to the less impact by social movements as compared to other Arab countries such as Bahrain.
Before the United Arabs Emirates gained independence, its economy was controlled by fundamental activities such as fishing, extraction of pearls and limited agriculture. With the discovery of oil 30 years, United Arabs Emirates economy developed constituting 35 percent of the GDP. In the year 2005, the country productivity from oil was 2.4 million barrels per day. 85 percent if this output was from Abu Dhabi. These huge oil revenues were spent by the government on infrastructure, education and job creation. This increased the employment rate the UAE. In the 1970s, oil prices went up significantly enabling wide economic development that needed an influx of labor. This consequently employed more people into the economy raising the employment rate.
For than a decade now, an initiative, Emiratization, has been in operation. This was a government project aimed at employing UAE citizens in a meaningful and effective way into the public and private sectors. Although the initiative has faced challenges, it has catered for a fraction of employment in the United Arabs Emirates. To further boost employment, the budget of the United Arabs Emirates provides 22.5 percent which is $2.6 billion out of the national budget. This is meant to increase the skilled laborers hence employment. Statistics from UAE’s Ministry of finance show by 2002, 2.0 million people were employed out of the 2.1 million nationals. This was 97.6 percent employment rate. However, this rate consisted of citizens from other Arab countries.
In addition to the internal employment opportunities, the United Arabs Emirates gains from being member of the GCC. The GCC consist of six country members of the Gulf Region. They include; United Arab Emirates, Kingdom of Saudi Arabia, Sultanate of Oman, State of Qatar, State of Bahrain and State of Kuwait. The council was formed with a goal of special relations with the member states. The nearness of the countries geographically would lead to free trade and formation of favorable economic policies for the member states. The United Arabs Emirates being one of the members would create jobs both in the private and public sectors.
The United Arabs Emirates economy has been greatly dependent on oil and gas productivity. This dependency on oil offers employment to majority of the nationals. However, the oil productivity is highly sensitive to price changes. For instance in 1986, oil prices went down resulting into national labor decline, consequently increasing the number of citizens looking for jobs hence increasing the unemployment rate. The 1986 increase trend in unemployment rate persisted and was carried on to the 1990s and the subsequent years following population pressures. By the end of the year 2001, the unemployment rate was at 2.4 percent, one of the lowest in the world (Kawach 2002). However, the percentage did not account for expatriates entering the employment section. Thus the unemployment rate could be higher among the rightful citizens of UAE. In the present years, basing increase in population and more graduates from educational institutions, unemployment rate has become chronic. In mid 2003, unemployment rate among citizens of UAE was at 10.4 percent while that of both the citizens and non-citizens was at 2.8 percent. Basing unemployment on gender, in the same year the unemployment rate among the women was higher. It was at 16.5 percent compared to a lower 8.4 percent among the male.
According to Saqr GHobash, the minister for labor in the UAE, most jobs in the country require low skills and their wages are small. However, despite the country having low skill job opportunities to offer, the citizens do not seek employment into such jobs. The wage rates for jobs in the public sector are very high relative to those offered in the private sector. Due to this wage differential, there occurs unemployment given that the private sector is to offer majority of the jobs and that the public sector cannot accommodate all the labor force. The unemployment rate in the UAE has been on an upward trend tracking the statistics from the year 2003.
The inflation rate for the UAE in February 2013 was estimated at 0.70 percent. From 1990 to 2013 the average inflation rate experienced in the UAE is 2.24 percent. The highest level was recorded in December 2008 while the lowest during the period was at 0.9 (consumer prices) percent in January 2011. Noticeably the country has been receiving high inflation from 2001 and the rate started easing in 2009. Given high food prices and limited food subsidies in UAE, the inflation rate is projected to continue rising although it will be constant at 4.5 percent. In 2010 the inflation rate (consumer) increased by 0.7 percent relative to the previous year. The monetary characteristics in the country in 2012 were marked by sustained growth in the central bank’s foreign asset. Even with an expansion in money supply and subdued inflation rates basing decrease in housing rents.
The UAE imports mainly chemicals and food, machinery and transport equipment. Tracking the import records from 2000-2011, the average imports for the UAE is 366396.2 million AED. The major partners in imports for UAE are Italy, china, UK, German, US, Japan and India. During the above period, the highest level of imports was recorded in December 2011 at 742372 million AED and the lowest level was in December 2000 at 128570.0 million AED
In its trade with the US in 2011, the UAE was the US’ 65th biggest supplier of imports. The US’ imports from UAE were at $2.4 billion in 2011 up from $1.3 billion in 2010. The US’ imports from UAE include; crude oil, iron and steel products, aluminum and mineral fuel.
In the year 2012, the total value of exports grew by 7 percent, valued at $302.4 billion. This increase in the exports was attributed by the large amounts of revenue gained from the exportation of oil. Despite recording a 7 percent growth, the rate was relatively small compared to the imports value hence a increasing the trade surplus by only a margin of 3.2 percent. The contribution of the trade balance towards the GDP was at 21 percent in 2012, a drop from 23 percent in 2011.
The average exports by the UAE during the period 2000-2011 was 510586.7 million AED with the highest export level of 1034323 million AED in December 2011. The lowest export level was at 179420 million AED in December 2001. In 2010 the exports were worth 78422 million AED. The exports increased in 2011 to 1034323 million AED. The major exports of UAE are oil and gas while the major export partners are Iran, Japan, US and China.
United Arabs Emirates leads in the exportation of capital in form of foreign direct investment (FDI) to other Arab countries. The cumulative FDI by the end of 2008 by the UAE total $45.7 billion. The GCC has enables trade exchange between the member countries recording a $91 billion in 2009 from $15 billion in 2002.
In the year 2011, the United Arabs Emirates was the US’s 19th largest export market. The US exported goods worth $15.9 billion, an increase from $4.2 billion in 2010. The US exports the following to the United Arabs Emirates; aircraft, machinery, vehicles, electrical machinery, metals such as gold, diamond, precious stones and agricultural products.
Statistics and Graphs
UAE’s GDP from the year 2007-2012 (in $ Billions)
UAE’s GDP per capita from the year 2007-2012 (in $ Billions
UAE’s GDP Growth rate from the year 2007-2012 ($ Billions)
Unemployment Rates for nationals in UAE by Sex (2003 Midyear Estimates)
Unemployment Rates for Non- nationals in UAE by Sex (2003 Midyear Estimates)
Unemployment Rate among UAE Nationals, 2003-2009
Inflation (consumer prices) percent in UAE (2003-2011)
The united Arabs Emirates economy is dependent on oil and natural gas which contributed 35 percent of the GDP. However in the recent times the United Arabs of Emirates becoming less dependent on oil and it now contributes 25 percent towards the GDP. The UAE is now steered by a number of macroeconomic elements which include; GDP, tourism and service, logistics and trade among others. The just mention macroeconomic elements are foresighted to be at 2.5 percent by the end of 2013.
The fact that United Arabs Emirates is a member of the GCC; it is the largest exporter of capital to other GCC members in form of foreign direct investment (FDI). The cumulative FDI by the end of 2008 by the UAE total $45.7 billion. The GCC has enables trade exchange between the member countries recording a $91 billion in 2009 from $15 billion in 2002. Given this the government should diversify the economic relation with the other members for maximum economic gain. This would be in form of job creation or creation of a favorable international business environment for local entrepreneurs. The country should also emphasize on investment, particularly foreign investment in the GCC country members and the rest of the world trade partners
There are low skill jobs available in the UAE though they are not the jobs that the nationals are looking for. This has created a number of citizens continuously seeking for jobs therefore increasing the rate of unemployment. To tackle this unemployment, the government should invest more on technology which will attract foreign investments thus offering high skill jobs. Technology will also help develop the private sector which caters for a good proportion of the population.
There is a wide wage gap between the public and private sectors. The public sectors wage rates are very high relatively. To ensure high employment rate, the government of the United Arabs Emirates should encourage the private sector through subsidies. The subsidies will reduce costs and therefore increase profitability of the private sector meaning more people will get employment this will also go in line with oil free economy by 2030.
The UAE’s external trade in 2012 had a positive feedback but was not better then 2011. This implies that the country is still dependent on the hydrocarbon products whose market was affected by the situation in the international scenario. These include the sanctions imposed on the neighbors, an increased go slow by the Asia economy and the fall of oil prices. The various sectors of the UAE economy were greatly affected; the tourism and the trade industries being the most affected hence the reduced external trade.
Kawach Nadim,“UAE Unemployment one of the lowest” UAE Economic, (Dec. 8, 2002), Dubai print.
Ali, Jasim Ahmed. Emiratisation in the local labor force of the UAE a review of the obstacles and identification of potential strategies. Lindfield, NSW: Australian and New Zealand Academy of Management, 2006. Print.
Avakov, Aleksandr V.. Two thousand years of economic statistics world population, GDP and PPP. New York: Algora Pub., 2010. Print.
Employment. New York: United Nations, 2000. Print.
Jim, James. Structural barriers to Emiratisation : analysis and policy recommendations. New York: Algora Pub., 2006. Print.
Mostyn, Trevor. UAE. London: Middle East Economic Digest, 2002. Print.
Walker, Jenny. Oman, UAE & Arabian Peninsula. 2nd ed. Footscray, Vic.: Lonely Planet, 2007. Print.
jack, Jenny. "Uae.com." Uae.com. N.p., n.d. Web. 2 Apr. 2011.
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UAE Ministry of Plannin, UAE, 2004, Abu Dhabi.