The two Emirates latest strategies provide a strong indication of their intention to break into higher technological intensity industries and cater to regional and global market segments.
The UAE Economic Progress
UAE has made progress with the diversification of its oil-driven economy and is now focusing on breaking into high tech manufacturing. Gas and oil have been the mainstay of its economy, accounting for about 40 percent of its GDP in the last decade.
The UAE government has emphasized on pursuing economic diversification and reduce the over-reliance on oil. This idea came out of the realization that the demand for oil and prices fluctuates, and hydrocarbon resources are finite. The government is in dire need to create more than one source of wealth for rich industrialized countries like the Netherlands, Australia, and Canada.
Emirates planes at Dubai International airport, UAE
The global economic downturn resulting from the Coronavirus pandemic has left UAE facing an uncertain future despite its strong reserves in finances. A small population of the UAE economy might suffer huge losses than during the 2008 financial crisis. Economic indicators show that the UAE economy has collapsed more in the second quarter of 2020 is much deeper than the second quarter of 2008.UAE economy is expected to recover faster than during the financial crisis, despite the negative impacts which will continue for more than two years to come after the global recession.
UAE imposed lockdown to curb the COVID-19 virus; as a result, beaches, and hotels remained empty, tourism dried up, and Malls and sectors that were mostly affected by the pandemic are major ones they account for over half of total GDP.
Is Abu Dhabi bailout looming again?
After the 2007-2008 financial crisis, the comparatively richer Emirates Capital Abu Dhabi rescued Dubai in 2009 with a combined sum of $20billion and sent Dubai shares soaring. Facing fewer economic consequences, Abu Dhabi still has the financial capabilities to bail out its brother once more.
UAE golden rules
There is hope for the UAE’s future economically as the country has enacted several new laws that open up new revenue streams and nurture businesses. For example, to support the rise of investment in the UAE in 2018, the UAE introduced a new investment law that allows 100 percent foreign ownership.UAE has plans to introduce long-term visas and ease its licensing requirements and wave or reducing business fees.
The introduction of VAT was a historic milestone in 2018 as it has greatly diversified the government revenues both now and in the coming years.
UAE emerging Opportunities
The Dubai Chamber of Commerce is looking further ahead and optimistic that things will stay on the rise. Recent analysis shows that UAE will have a GDP growth rate of 3.8 percent by 2023 due to increased investment and consumer spending.
The diversification of the UAE economy to a non-oil economy is a bright idea that will make the economy grow by an average of 4 percent between 2019-2023 compared to 3 percent accounted for in 2014-2018. The Dubai Chamber of Commerce thinks that UAE’S GDP in the next five to ten years will be driven by the country’s transport and communication sector, which is estimated to record 7.9 percent, followed by construction at 4.2 percent and real estate at 3.8 percent.
UAE has emerging markets in Africa, Asia, and the Commonwealth states, and it is expected to outperform the rest of the world.
Strong positions of UAE banks
The whole world leaders has kept its outlook on the UAE’s banking system as stable, reflecting the banks’ resilient profitability, share capital, and stable funding, making loan performance to stabilize.
According to IMF forecasts, due to the outbreak of COVID-19, UAE GDP growth is expected to fall to-3.5 percent in 2020 and pick up to 3.3percent in 2021.
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