Economy of the United Arab Emirates

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.

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 Dubal, 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.

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, the Dubai International Financial Centre was announced, offering 100% foreign ownership, no 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, Zurich 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 worlds 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.

Overview

The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Its wealth is based on oil and gas output (about 33% of GDP), and the fortunes of the economy fluctuate with the prices of those commodities. Since 1973, 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. At present levels of production, oil and gas reserves should last for over 100 years. Despite higher oil revenues in 1999, the government has not drawn back from the economic reforms implemented during the 1998 oil price depression. The government has increased spending on job creation and infrastructure expansion and is opening up its utilities to greater private-sector involvement.

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 - $57.7 billion (2003 est.)

GDP - real growth rate: 5.2% (2003 est.)

GDP - per capita: purchasing power parity - $23,200 (2003 est.)

GDP - composition by sector:
agriculture: 4%
industry: 58.5%
services: 37.5% (2002 est.)

Population below poverty line: NA%

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

Inflation rate (consumer prices): 3.2% (2003 est.)

Labour force: 2.16 million (2003)
note: 73.9% of the population in the 15-64 age group is non-national (2003)

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: $17.35 billion
expenditures: $23.85 billion, including capital expenditures of $3.4 billion (2003 est.)

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

Industrial production growth rate: 4% (2000)

Electricity - production: 37.74 TWh (2001)

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

Electricity - consumption: 35.1 TWh (2001)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

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

Exports: $56.73 billion (f.o.b., 2003 est.)

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

Exports - partners: Japan 26.8%, South Korea 9.5%, Iran 3.8% (2003 est.)

Imports: $37.16 billion (f.o.b., 2003 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: $20.71 billion (2003 est.)

Economic aid - recipient: $NA

Currency: 1 UAE dirham = 100 fils

Exchange rates: Emirati dirhams per US dollar - 3.67 (2003), 3.6725 (2002), 3.6725 (2001), 3.6725 (2000), 3.6725 (1999)

Fiscal year: calendar year

See also

United Arab Emirates

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