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Socio-Economic Condition Of Uae

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SOCIO- ECONOMIC CONDITION OF UAE

INTRODUCTION

UAE is a small country of 7 emirates who chose to unite in 1971.Since then their economy has developed by almost 231 times to AED1.45 trillion out of 2013.Internationally, UAE is positioned among the best 20 for worldwide administration business, as indicated by AT Kearney, the best 30 on the WEF “most-organized nations” and in the best quarter as a minimum degenerate nation for each the TI’s defilement list. Dubai has changed significantly in the course of the most recent three decades, turning into a noteworthy business focus with being effective in expanding its economy.In spite of the fact that the UAE has the most expanded economy in the GCC, its economy remains to a great degree dependent on oil(petroleum).

Except for Dubai, the vast majority of the UAE is subject to oil incomes. Oil and flammable gas keep on assuming a focal job in the economy, particularly in Abu Dhabi.Tourism is one of the greater non-oil wellsprings of income in the UAE, with a portion of the world’s most rich lodgings being situated in the UAE. A huge development blast, a growing assembling base, and a flourishing administrations division are helping the UAE broaden its economy. Across the nation, there is as of now $350 billion worth of dynamic development ventures. The reasons adding to this includes saving money, tourism, trade and land. Increment of Emirati buying power and legislative consumptions in framework ventures have significantly expanded.

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The UAE has risen as one of the best nations as far as financial improvement and related pointers on account of its sound government arrangements and monetary order It has also beaten nations, for example, Britain, France, Japan and China in monetary productivity, as per a report. It can be said that a portion of the significant ramifications of the prominent rank accomplished by the UAE in monetary arrangement effectiveness can be condensed in the accompanying ways: First, the adequacy of the administration approach when all is said in done and monetary arrangement specifically demonstrates that a parity has been struck between the necessities of improvement and raising the ways of life of the two natives and occupants. Second, it focuses to the productivity of the social security net and benefits and the non-burden of duties Third, the viability of monetary approach demonstrates the productivity of government spending plan and compelling allotment of assets.Fourth, monetary control has prompted productive administration of money related surpluses and their utilization in the administration of advancement.

GROSS DOMESTIC PRODUCT PER SEGMENT

Michael Armstrong, ICAEW territorial executive for the Middle East, Africa and South Asia (MEASA), stated: “The UAE is progressing nicely to financial expansion and is actualizing the essential monetary changes to help these endeavors. The presentation of VAT is an imperative advance toward expanding government income and building charge limit. In later years, UAE has turned into a noteworthy entrance for various developing, beneficial ventures and exercises: Meetings, gatherings, presentations Tourism Corporate provincial central command Regional transport, conveyance and coordinations focus Banking, back and protection Business and modern counseling Information and Communications Technology Light and medium assemblingThis all wound up conceivable because of Dubai’s warm, inviting individuals, world class offices and framework and farsighted, open and liberal financial arrangements. {The above images show the trends in GDP of the UAE and how the growth is expected in various sectors of UAE}Furthermore, the UAE is beginning to see the rise of nearby assembling as new wellspring of monetary advancement, models of huge government-drove speculations, for example, Strata in airplane business, under Mubadala are effective, while there are additionally little scale innovative endeavors grabbing, for example, Zarooq Motors in the car business.

The reports of the Federal Competitiveness and Statistics Authority, noticed that the United Arab Emirates net national item (GDP) at genuine (consistent) costs ascended by 3% toward the finish of 2016 contrasted with 2015, as per the starter appraisals of the financial insights, which affirmed that the State economy has kept up positive development rates at steady costs because of the achievement of the State in following the monetary expansion approaches, growing the financial generation base, and enacting activities and exercises that would build dependence on non oil segments, and improving their economy.Dubai, which customarily represents 25-30 percent of the UAE’s GDP, is likewise anticipated that would lift spending by 20 percent in anticipation of Expo 2020. commitment to the GDP of the State, in spite of the precarious states of the worldwide oil markets, and the decrease underway costs in different markets.

GROSS DOMESTIC PRODUCT SEGMENT

This segment estimates the cash estimation of buyer merchandise and ventures which are bought by families and non-benefit foundations for current use amid a time of record. I-Investment expense Venture implies increases to the physical supply of capital amid a timeframe. G-Government Purchases of Goods and Services This part abridges government spending on merchandise and ventures. It incorporates buy of halfway merchandise and wages and pay rates paid by the legislature. (X-M)-Net exportsIt demonstrates the contrast among imports and fares. GDP gauges at current costs of the non oil parts added up to around 1067.3 billion dirhams, up by 3.9% (at current costs) and at a rate of 2.7% at genuine (consistent) costs before the finish of 2016 contrasted with its incentive before the finish of 2015. The information demonstrated that the exercises identified with the extraction of raw petroleum and gaseous petrol contributed by around 16.7%, while every one of the discount and retail exchange exercises represented 12.8%, the development and building exercises contributed by 10.3%, the commitment of the money related administrations exercises added up to 10.1% and the transformative ventures exercises by 9.5%, roughly.

The most elevated rate of development in genuine costs was in transport and capacity segment 7.4%, expressions and amusement and different administrations exercises 6.5%, transformative enterprises 6%, convenience and sustenance administrations 5.7%, and human wellbeing and social administrations 5.2%. This affirms the positive way to accomplish the UAE 2021 vision and its procedure for the advancement of non oil areas and diminish reliance on oil. Exports are relied upon to ascend by 4.5% to reach $312 billion of every 2017, in accordance with the normal change on the planet oil costs. Imports additionally are required to ascend by 0.7% to reach about $232 billion. Mirroring these advancements in fares and imports, the exchange surplus is required to rise 17.1% to reach about $80 billion.

RELATIONSHIP BETWEEN UAE AND INDIA

The exchanging relationship among UAE and India began with pearl trading. Amid the past days UAE’s wellspring of pay was pearl harbor and pearl was a generally utilized adornment in jewellery making in India,hence the relationship bloomed. The UAE’s economy is a standout amongst the most open around the world, and its history of monetary history likewise returns to the occasions when ships cruised to India, along the Swahili drift, as far south as Mozambique. Presently UAE and India have an altogether different exchanging relationship. They have progressed in the direction of solid monetary securities by making medium-long term strategy decision to increment respective exchange. The two nations need to utilize segment particular system to help two way exchange and speculations. They intend to give exceptional consideration in industries of civil aviation,trade, energy and climate. The current financial relationship is that UAE furnishes India with unrefined oil and India thusly sends out oil based commodities(petroleum products) to the UAE. Other significant imports from the UAE include:

  • Precious metals
  • Diamonds, gold and pearls
  • Mineral fuels and oil
  • Copper wire, base metals and polymers In 2016, exchange among UAE and India was more than 70bn Dirhams.In 2017,trade among UAE and India was more than 85.9bn Dirhams Imports from India to UAE represent 60% of the aggregate exchange esteem.

CONSUMER PRICE INDEX

Customer Price Index CPI in the United Arab Emirates diminished to 111.40 Index Points in July from 111.50 Index Points in June of 2018. Purchaser Price Index CPI in the United Arab Emirates found the middle value of 99.69 Index Points from 2008 until 2018, achieving a record-breaking high of 112.29 Index Points in January of 2018 and a record low of 89.17 Index Points in January of 2008. Purchaser Price Index CPI in the United Arab Emirates is relied upon to be 111.47 Index Points before the finish of this quarter, as per Trading Economics worldwide full scale models and experts desires. Looking forward, we gauge Consumer Price Index CPI in the United Arab Emirates to remain at 115.18 of every a year time. In the long haul, the United Arab Emirates Consumer Price Index (CPI) is anticipated to drift around 120.20 Index Points in 2020, as indicated by our econometric models.

The expansion rate in purchaser costs for the a year of 7102 was 0.1% contrasted and a similar time of 7101, as appeared by the expansion in the CPI to 108.1% amid the a year of 7102, up from 106.4% amid a similar time of 7101Abu Dhabi region contributed 47.1% of the total increase of 0.1% during the twelve months of 2017 compared with the same period of 2016, while Al-Ain region contributed 0..1% and Al Dhafra region 2.0%.United Arab Emirates’s Consumer Price Index Growth is forecasted to be 4.17 % in Dec 2018 as reported by International Monetary Fund – World Economic Outlook. It records a decrease from the last reported number of 1.97 % in Dec 2017. Looking ahead, United Arab Emirates’s Consumer Price Index Growth is projected to stand at 2.01 % in Dec 2023As an economist, I expect inflation to average 3.7% in 2018 and 2.8% in 2019.

FORECAST

Economic growth in UAE grew in 2017, supported by the prospect of a rebound in oil prices again and the trend towards a strong boost in economic diversification policies through the adoption of:

  • Future national visions
  • Plans and strategies to increase the levels of diversification according to quantitative targets and operational programs to achieve tangible achievement in terms of diversification
  • To proceed forward with the implementation of investment projects in infrastructure sectors and the projects listed in the development plans for the expansion of airports and railways, means of land and sea transport, tourism facilities real estate, and those related to the preparation of the exhibition “Expo 2020″.

In contrast, it is expected that the quantities of oil production shall be affectedWhile the high levels of inflation will reduce with the expectation of stability in the world commodity prices, the decline in houses’ prices and rents with the increased supply levels by introducing new houses’ units and the slower demand levels due to the postponement of implementation of some investment projects.As an economist I expect GDP to increase 2.5% in 2018, which is down 0.1 percentage from last month’s forecast, and 3.1% in 2019.

LONG TERM FORECAST

UAE is one of the 32 of the largest economies in the world.It accounts for around 85 per cent of global GDP. I am assuming that this could be more than double in size by 2050 due to:productivity improvements supported by technological innovation.Six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China, India and Indonesia . New markets such as Mexico, Turkey and Vietnam could overtake leading economiesThe UAE is the leading country in the Middle East when it comes to developing the clean and renewable energy sector. It is a possibility that 50 per cent of its energy sources are clean by 2050.AI will be a game changer in the global business by 2030 and UAE is expected tocontribute around $9.6 billion which will account for 13.6% of its GDP.

CONCLUSION

Flurry of reforms implemented in recent months to stimulate investment and business activity. These measures include:

  • A joint investment plan with Saudi Arabia
  • A large fiscal stimulus program in Abu Dhabi•Visa and business licensing reform which aims to reduce the cost of doing business and attract foreign companies and skilled workers.

Going forward, the country should also benefit from strong external demand, notably from GCC countries and Europe; as well from a likely improvement in employment growth, which was anemic in the first half of the year.Its low logistical and operational costs and excellent infrastructure, international outlook and liberal government policies are attracting investors in a big way. Activities such as trade, transport, tourism, industry and finance have shown steady growth and helped the economy to achieve a high degree of expansion and diversification.The UAE government has worked towards reducing the economy’s dependence on oil exports by 2030. Various projects are underway to help achieve this. The UAE has also won the right to host the World Expo 2020, which is believed to have a positive effect on future growthThe UAE economy is set to accelerate growth this year and in 2019 after a difficult 2017 when growth slowed to a seven-year low of 1.5 percent.But the accountancy and finance body warned that general prices are expected to increase as inflation will rise to 4 percent this year.UAE’s growth will be primarily driven by recovering oil prices, an expansionary fiscal stance at the federal and emirate levels, a buoyant trade and tourism environment and a pick-up in investment ahead of Expo 2020 in Dubai.

REFERENCES:

  1. https://www.emirates247.combusiness/economy-finance
    socio-economic-development-2012-07-01-1.465163
  2. http://www.economy.gov.ae/EconomicalReportsEn/MOE%20Annual.pdf
  3. http://www.dubai.ae/en/aboutdubai/Pages/DubaiEconomy
  4. https://tradingeconomics.com/united-arab-emirates/
  5. https://www.ceicdata.com/en/indicatorforecast-consumer-price-index-growth
  6. https://www.economy.com/unitedarabemirates/consumerpriceindexcpi
  7. https://www.focus-economics.com/countriesunitedarabemirates

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