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Economic Conditions

The UAE has managed to diversify its economy, so it is not dependent on oil and gas trade. For this reason, the UAE is facing an impressive growth in the annual GDP rate with a stable inflation rate.  

Growth Rate on the rise
After a long period of time with economic growth, the financial crisis in 2008 hit the UAE hard, and especially the real estate
sector suffered a drastically economic downturn. Statistics from The World Bank shows that the annual growth rate dropped from 3.2% in 2008 to -5.2% in 2009.

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Despite this dramatic fall, the annual growth rate re-established itself at a 5% in average in the following five years. The total GDP has increased from just above USD100bn in 2000 to USD402.3bn in 2013. The GDP per capita faced a drop to USD20.689 from 2006 to 2007 (in constant 2005 USD), but rose to USD25.150 in 2013.

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Diversifying Economy
The UAE's authorities have reduced its dependency on oil exports by diversifying the economy, creating booming business,
tourism and construction sectors. According to the UAE Ministry of Foreign Trade, 71% of the UAE’s total GDP comes from non-oil sectors. Although the UAE remains somewhat oil dependent, it is the least vulnerable to oil prices declines or export volume declines among the six GCC countries, according to Standard & Poor’s Rating Services. The UAE Ministry of Economy plans to lower the oil sector’s contribution to GDP to 20% by 2025 by increasing the services and industry sectors.

The World Trade Organization (WTO) highlights how the concentration of UAE’s hydrocarbon exports as a percentage of total exports has furthermore declined by almost 15% since 2001, mainly owing to re-exports and the services exports of Dubai.
UAE – and in particular Dubai – is seen as a regional hub and headquarter for re-export because of its geographically and
strategically good location, with well-developed flight and shipping routes, than connects to the rest of the world.

Massive import and export of goods and services
Imports and export of goods and services is on the rise in the UAE. The statistic below represent the percentage value of GDP of all goods and other market services that the UAE received from and supplied to the rest of the world.

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The statistic include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services, and exclude compensation of employees and investment income (formerly called factor services) and transfer payments.  

Stable Economy
The UAE is considered a stable economic growth market in the Middle East and is not directly threatened by any global crises at

the moment. The UAE’s currency AED (dirham) is pegged to the US dollar. This implies that a fall in the US dollar would erode the purchasing power in relation to the imported goods that the country is so depended on.

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The government of the UAE are very aware of this problem and is trying to tackle it with initiatives as freezing the prices on water, electricity and chosen everyday consumer goods. According to the inflation rate chart, the inflation has the last couple of years been under control, compared to the high inflationary pressure in 2007 and 2008. The control of the inflation rate is indispensable in securing that labourers still find it economically favourable to live and work in the UAE.