Overview

The United Arab Emirates has a highly industrialized economy that makes the country one of the most developed in the world, based on various socioeconomic indicators such as GDP per capita, energy consumption per capita, and the HDI.

At $168 billion in 2006, the GDP of the UAE ranks second in the CCASG (after Saudi Arabia), third in the Middle East—North Africa (MENA) region (after Saudi Arabia and Iran), and 38th in the world (ahead of Malaysia). 1

There are various deviating estimates regarding the actual growth rate of the nation’s GDP, however all available statistics indicate that the UAE currently has one of the fastest growing economies in the world. According to a recent report by the Ministry of Finance and Industry, nominal GDP rose by 35 per cent in 2006 to $175 billion, compared with $130 billion in 2005.

Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in Abu Dhabi. A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects. 3

Brief History

Prior to the first exports of oil in 1962, the United Arab Emirates economy was dominated by pearl production, fishing, agriculture, and herding. Since the rise of oil prices in 1973, however, petroleum has dominated the economy, accounting for most of its export earnings and providing significant opportunities for investment. The UAE has huge proven oil reserves, estimated at 98.2 billion barrels (16 km³) in 1998, with gas reserves estimated at 5.8 km³. At present production rates, these supplies would last well over 150 years.

the source from UAQ WATER PLANT

Macro-economic trend

This is a chart of trend of gross domestic product of United Arab Emirates at market prices estimated by the International Monetary Fund with figures in millions of Dirhams.

Year	GDP (millions of AED)	US Dollar Exchange	Inflation Index (2000=100)
1980	109,833	3.70 Dirhams	85
1985	100,400	3.67 Dirhams	57
1990	123,541	3.67 Dirhams	69
1995	157,144	3.67 Dirhams	89
2000	259,247	3.67 Dirhams	100
2005	491,265	3.67 Dirhams	121
2006	642,000	3.67 Dirhams	---

For purchasing power parity comparisons, the US Dollar is exchanged at 4.41 Dirhams only.

In 2003, the UAE produced about 2.3 million barrels (370,000 m³) of oil per day--of which Abu Dhabi produced approximately 85%--with Dubai, and Sharjah to a much lesser extent, producing the rest. Indeed, estimates say that Dubai has less than 10 years of oil left at current production levels and Sharjah has less. Sharjah however, does have some gas reserves remaining. Dubai's small remaining gas reserves are earmarked for use by Dubai, which is one of the largest aluminium smelters in the world, with a very low cost per tonne of production, thanks in part to its energy needs being met by these gas reserves.

Major increases in imports occurred in manufactured goods, machinery, and transportation equipment, which together accounted for 70% of total imports. Another important foreign exchange earner, the Abu Dhabi Investment Authority--which controls the investments of Abu Dhabi, the wealthiest emirate--manages an estimated $360 billion in overseas investments. More than 200 factories operate at the Jebel Ali complex in Dubai, which includes a deep-water port and a free trade zone for manufacturing and distribution in which all goods for re-export or transhipment enjoy a 100% duty exemption. A major power plant with associated water desalination units, an aluminium smelter, and a steel fabrication unit are prominent facilities in the complex. The complex is currently undergoing expansion, with sections of land set aside for different sectors of industry. A large international passenger and cargo airport, with associated logistics, manufacturing and hospitality industries, is also planned here.

Except in the free trade zone, the UAE requires at least 51% local citizen ownership in all businesses operating in the country as part of its attempt to place Emiratis into leadership positions. However, this law is under review and the majority ownership clause will very likely be scrapped, to bring the country into line with World Trade Organisation regulations.

As a member of the Gulf Cooperation Council (GCC), the UAE participates in the wide range of GCC activities that focus on economic issues. These include regular consultations and development of common policies covering trade, investment, banking and finance, transportation, telecommunications, and other technical areas, including protection of intellectual property rights.

Diversification

Recently, the Emirate of Dubai has started to look for other sources of revenue. High-class tourism and international finance are the new sectors starting to be developed. In line with this initiative, the Dubai International Financial Centre was announced, offering 100% foreign ownership, no withholding tax, freehold land and office space and a tailor-made financial regulatory system with laws taken from best practice in other leading financial centres like New York, London, Zürich and Singapore. A new stock market for regional companies and other initiatives were announced in DIFC. Dubai has also developed Internet and Media free zones, offering 100% foreign ownership, no tax office space for the worlds leading ICT and media companies, with the latest communications infrastructure to service them. Many of the world's leading companies have now set up shop there. Recent liberalisation in the property market allowing non citizens to buy freehold land has resulted in a major boom in the construction and real estate sectors, with several signature developments such as the 2 palm islands, the World, Dubai Marina, Jumeirah Lake Towers, and a number of other developments, offering villas and high rise apartments and office space.

In 2001, budgeted government revenues were about AED 29.7 billion, and expenditures were about AED 22.9 billion. !!!!

Investment

The stock market capitalisation of listed companies in the UAE was valued at $225,568 million in 2005 by the World Bank.[1]

Additional Information

The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Despite largely successful efforts at economic diversification, about 30% of GDP is still directly based on oil and gas output, and the fortunes of the economy fluctuate with the prices of those commodities. Since the discovery of oil in 1962, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. The government has increased spending on job creation and infrastructure expansion and is opening up its utilities to greater private sector involvement. In April 2004, the UAE signed a Trade and Investment Framework Agreement (TIFA) with Washington and in November 2004 agreed to undertake negotiations toward a Free Trade Agreement (FTA) with the US. Higher oil revenue, strong liquidity, and cheap credit in 2005-06 led to a surge in asset prices (shares and real estate) and consumer inflation. Rising prices are increasing the operating costs for businesses in the UAE and degrading the UAE's allure to foreign investors. Dependence on a large expatriate workforce and oil are significant long-term challenges to the UAE's economy.

Expatriates from India and Pakistan perform a significant role in the local economy. However, to control illegal immigration into the country, on November 9, 2002, the UAE immigration ministry announced that all Indians visiting the country must have a return ticket.

GDP: purchasing power parity $129.4 billion (2006 est.)[https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html#Econ]

GDP - real growth rate: 10.2% (2006 est.)[https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html#Econ]

GDP - per capita: purchasing power parity $49,700 (2006 est.)[https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html#Econ]

GDP - composition by sector:
agriculture: 2.3%
industry: 61.9%
services: 35.8% (2006 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 10% (2006 est.)

Labour force: 2.968 million (2006 est.)

Labour force - by occupation: services 78%, industry 15%, agriculture 7% (2000 est.)

Unemployment rate: 2.4% (2001) Note: unemployment among non citizens is practically non existent, while unemployment among Emaratis is reportedly as high as 15%

Budget:
revenues: $60.3 billion
expenditures: $35.2 billion; including capital expenditures of $5.9 billion (2006 est.)

Public Debt: 9% of GDP (2006 est.)

Industries: petroleum, fishing, petrochemicals, construction materials, some boat building, handicrafts, pearling

Industrial production growth rate: 4% (2000)

Electricity - production: 49.52 billion kWh (2004)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 46.05 billion kWh (2004)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: dates, vegetables, watermelons; poultry, eggs, dairy products; fish

Exports: $137.1 billion f.o.b. (2006 est.)

Exports - commodities: crude oil 45%, natural gas, reexports, dried fish, dates

Exports - partners: Japan 24.5%, South Korea 9.8%, Thailand 5.6%, India 4.3% (2005 est.)

Imports: $88.89 billion f.o.b. (2006 est.)

Imports - commodities: machinery and transport equipment, chemicals, food

Imports - partners: China 10.9%, Japan 7.9%, Germany 7.8%, US 7.6%, France 7.5%, UK 6.5%, Italy 4.8%, India 4.4% (2003 est.)

Debt - external: $39.1 billion (2006 est.)

Economic aid - Donor: since its founding in 1971, the Abu Dhabi Fund for Development has given about $5.2 billion in aid to 56 countries (2004)

Currency: 1 United Arab Emirates dirham = 100 fils

Exchange rates: Emirati dirhams per US dollar - 3.673 (2006), 3.6725 (2005), 3.6725 (2004), 3.6725 (2003), 3.6725 (2002)

Fiscal year: calendar year

See also

United Arab Emirates

•  • [ e] Organization of the Petroleum Exporting Countries (OPEC)
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