United Arab Emirates - Economy

Economy

At the time of independence, the UAE was already regarded as a rich country with GDP per capita exceeding US$ 2,000. In 2011, UAE is ranked as the 14th best nation in the world for doing business based on its economy and regulatory environment, ranked by the Doing Business 2011 Report published by the World Bank Group

The UAE has an open economy with one of the highest per capita incomes in the world and a sizable annual trade surplus. In 2009, its GDP, as measured by purchasing power parity, stood at US$ 400.4 billion. The GDP per capita is currently the third in the world and second in the Middle East, after Qatar and Kuwait as measured by the CIA World Factbook, or the 17th in the world as measured by the International Monetary Fund.

With almost US$ 1 trillion in foreign invested assets, some argue the UAE to be the richest, with the highest average income in the world. Over half of this money is generated by the nation's capital, Abu Dhabi. With a population of just under 900,000 Abu Dhabi was labeled "The richest city in the world" by a CNN article .

UAE's economy, particularly that of Dubai, was badly hit by the financial crisis of 2007–2010. In 2009, the country's economy shrank by 4.00%, but UAE's overseas investments are expected to support its full economic recovery. However, concern remains about the property sector. Property prices in Dubai fell dramatically when Dubai World, the government construction company, sought to delay a debt payment. The ability to service debt remains a problem.

Petroleum and natural gas exports play an important role in the economy, especially in Abu Dhabi. More than 85% of the UAE's economy was based on the exports of natural resources in 2009.

A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects. Aluminum, steel, iron and other forms of metal exports along with textile produce much a significant amount of income and are expected to surpass the income brought in by petroleum and Government projects include the Burj Khalifa, which is the world's tallest building, Dubai World Central International Airport which, when completed, will be the most expensive airport ever built, and the three Palm Islands, the largest artificial islands in the world. Other projects include the Dubai Mall which is the world's largest shopping mall, and a man-made archipelago called The World which seeks to increase Dubai's rapidly growing tourism industry. Also in the entertainment sector is the construction of Dubailand, which is expected to be twice the size of Disney World, and of Dubai Sports City which will not only provide homes for local sports teams but may be part of future Olympic bids. However, this is concern that this construction boom has been built on debt and speculation, with little creation of true economic value.

Major increases in imports occurred in manufactured goods, machinery, and transportation equipment, which together accounted for 80% 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 & an estimated $900 billion in assets.

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 transshipment 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, Dubai World Central International Airport, with associated logistics, manufacturing and hospitality industries, is also planned here.

Except in the free trade zones, 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 in order 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.

The currency of the United Arab Emirates is the Emirati Dirham.