Introduction to UAE
UAE is also called as “The United Arab Emirates” and “the Emirates or the UAE”. At present, the population of UAE has been accounted at 9.2 Millions. This country was established in the year 1971, and it comprises of seven emirates or principalities and they are (Katzman, 2010):
- Abu Dhabi- Known as the oil rich capital
- Dubai- The free trading commercial hub of the country
- Emirates of Sharjah
- Umm Al Quwain
- Ras Al Khaimah (Katzman, 2010)
Each of the above mentioned emirates are ruled by a hereditary ruler. The UAE is known at the one of the world’s primary producers of oil and they generate lot of benefits from the increasing prices of the oil around the world. However, we need to remember that they do not rely on oil market for keeping their economical growth on par. Isaac (2013) has mentioned in his article UAE, which is second largest economy in the World finished 2013 with the GDP of 4.5%.
According to the report of Dr. Abdulaziz (2007), UAE has now started concentrating on the outward-orientated growth policy. They have been working on their diversification strategies for supporting their GDP. The discovery of oil in UAE nearly 30 years back has completely transformed the company, they are no longer considered as the desert, and now they are known for being a country with a high standard of living.
The main reason for the economical growth of UAE has been attributed to their vision of becoming an international trading hub apart from being the regional financial centre. Various macroeconomic indicators have contributed towards the overall economical growth of the country.
Major Macroeconomic Indicators
The statistics, which point towards the present status of any economy depending on specific areas of that economy, are considered as Macroeconomic Indicators. These indicators are published by the Government of the country.
1. Growth of GDP in UAE over the years
As mentioned earlier, most part of GDP of UAE is from their oil shares but other factors also contributed towards their growth. Here we will be looking at the GDP;
UAE GDP: The past, present and future predictions about the GDP of UAE have been presented in the image below. According to the image, we can see that the real annual growth of UAE was recorded at 4.36% in 2012 and 4.7% in 2013. At present, the GDP has been recorded at 4.35% for 2014. The future predictions show a decline in the GDP growth rate.
UAE GDP according to the emirates- 2013
2. Contribution of Non-oil Sector
While the oil sector of UAE showed an expansion of nearly 4.8% in 2013. This sectors growth was lower when compared to 2012 but still the contribution is commendable. As far as non-oil sector is concerned:
UAE economy growth by sector
According to the above table, we can clearly see that the year 2013 got a great contribution from Oil, Real estate and trade sector. There was equal contribution of 9% received from Transport and communications, construction and manufacturing sectors.
3. Labor Productivity in UAE
In simple terms, productivity of an economy is the efficiency through which it brings output through the given input. It measures the performance of that economy. The higher the productivity value, the better is the growth of economy. It shows that the economy is efficient and competent in the global market. There has been a restriction on the accessing this data.
The following table will indicate the productivity of Labour depending on the sectors (Data available for 2006-2008).
Distribution of Workforce- 2011
According to the workforce data available for 2011, 22% of total workforce are working in construction and building sector. This is followed by 19% of the people are working in Wholesale and Retail Trade and repair services.
4. Inflation in UAE
The below statistical data highlights the inflation rate of UAE from 2009 to 2014 (5 years)
(Source: @statista 2014)
The above data clearly indicates the huge impact the recession has on the economy of UAE, were the inflation rate was recorded at 12.25%. The above data also shows how UAE has jumped back on track and the current estimated inflation rate for 2014 has been predicted at 2.24%*.
5. Total Population
6. Foreign Trade
Richer a country, the more they will be engaged in foreign trade. Researchers have already proven in their studies that GDP of a country has a positive relation with the foreign trade. Looking at the image below, we can clearly see that the total trade has increasing considerably over past couple of years. The Total Trade was recorded at 66.37 Billion AED in 2009, whereas it reached 901.74 Billion AED by end of 2011.
7. Unemployment Rate
In UAE, the unemployment rate is calculated by measuring the number of people who are looking out for job as a percentage against the total labor force.
The unemployment rate in 2013 was reported 4.2 when compared to 4.6 at the end of 2012. Compared to the data of past 3 years, unemployment rate was on lower side in the year 2008 and 2009.
United Arab Emirates: Selected Macroeconomic Indicators, 2013–19 (Source: http://www.imf.org/external/np/ms/2014/052714a.htm)
Looking at the above data, we can clearly see that the growth prospects are high in UAE and towards the positive end. This growth will be further pushed due to the increasing economic diversification. Governments increasing contribution towards the upcoming project in Abu Dhabi and Dubai will contribute in the overall growth in terms of non-oil sector. Yet there are many challenges that the country has to overcome, which includes:
1. The country has a very limited indigenous demographic who are capable to fulfill the development requirements.
2. Constant changes in the revenue generated by the country.
3. The country has been relying heavily on their oil revenues for any development works.
4. The country has to stop relying on the external market for importing various kinds of goods.
Dr. Abdulaziz Istaitieh, Hugo, Sarah. Husain, Natasha. (2007). UAE Macroeconomic Report. Macroeconomic Report Series. [Online]. Available at http://www.arabruleoflaw.org/compendium/Files/UAE/103.pdf. [Accessed on 21st November 2014].
Issac John. (2013). UAE's economy growth momentum set to pick up, article, [Online]. Available at http://www.khaleejtimes.com/kt-article-display-1.asp?section=editorschoice&xfile=/data/editorschoice/2013/December/editorschoice_December12.xml. [Accessed on 21st November 2014
Katzman, Kenneth. (2010). United Arab Emirates (UAE): Issues for U. S. Policy. DIANE Publishing
Statista. (2014). United Arab Emirates: Inflation rate from 2004 to 2014 (compared to previous year). [Online]. Available at http://www.statista.com/statistics/297779/uae-inflation-rate/. [Accessed on 21st November 2014].