In 1971, the year of the UAE’s formation, the
country’s GDP was Dh6.5 billion. Thirty-seven years later it
stood at around Dh753 billion, a multiple of 115 times. However, past
growth rates are unlikely to continue indefinitely. Instead, the UAE
economy is maturing and stabilising.
The UAE continues to be a strategic hub, with business-friendly free
zones and a quickly growing economy. The country has experienced significant
economic growth. Average GDP growth over 2000 to 2006 in the UAE was
about 8.4 percent - the highest in the Gulf Cooperation Council, which
averaged 6.5 percent.
The nominal GDP for 2007 was $192 billion. This reflects the rich
natural resources in the UAE, which has 10 percent of the total world
supply of oil reserves and the world’s fifth largest natural
Despite the impact of the global financial crisis being felt throughout
the region, the UAE’s economy continues to expand and its financial
fundamentals remain sound.Not only has the slow down encouraged the
property development sector to take stock of decisions made at a time
of rampant growth and surging inflation, it has also resulted in the
stabilisation or reduction of prices for many essential building materials,
such as steel and cement.
The UAE Government has been making efforts to ensure that the over-heated
credit market does not get out of control in the future and has brought
in more stringent guidelines for lending to both individuals and companies.
There is no doubt that revenues from oil exports were instrumental
in transforming the economy of the country. Nevertheless, there is
a deep awareness that the security of future generations depends on
prudent investment both at home and abroad.
The UAE has launched a diversification and liberalization
program to reduce reliance on oil and transform its economy from a
conventional, labor-intensive economy to one based on knowledge, technology
and skilled labor. The federal and individual Emirate governments
have invested heavily in sectors such as aluminum production, tourism,
aviation, re-export commerce and telecommunications.
In 2007 the non-oil sector accounted for 64.1
per cent of GDP (amounting to Dh467.9 billion) and the hydrocarbon
sector 35.9 per cent. Remarkably, the non-oil sector figure was achieved
in a year when oil prices increased by 18.2 per cent, inevitably boosting
earnings. The UAE has diversified its economy to an extent that it
is not totally at the mercy of the fluctuating world of oil prices.
Manufacturing (12%); wholesale, retail and maintenance (10%); construction
and real estate (each 8%); government services (7%) and financial
enterprises and transport/storage/communications (both 6%). Agriculture,
electricity and water, restaurants and hotels, together with social
and private services, accounted for around 6% of total GDP.
It is worth remembering that diversification has been a necessity
rather than a luxury for most of the emirates. With Abu Dhabi holding
over 90 per cent of the country’s hydrocarbon reserves, other
emirates were forced to look elsewhere for economic growth. Dubai,
where as little as 3% of GDP is contributed by oil, depends more on
tourism, transport, trade, construction, real estate development and
Each of the emirates has adopted its own formula
for growth, playing to their individual strengths and tapping into
the network of advantages that membership of the federation has brought
The Free Zones have been
one of the strongest pillars of the country’s diversification
strategy, attracting significant amounts of foreign investment, creating
thousands of jobs, and facilitating technology transfer into the country.
At US$19 billion in 2007 the value of foreign direct investment in
the UAE is the highest in the region.