Dubai: Sultan Bin Saeed Al Mansouri, the UAE’s Minister of Economy, said on Saturday in a statement released by WAM that the UAE economy in a strong position to weather the drop in oil prices.
The statement said that oil prices have not affected the country’s ongoing development plans and projects, in specific large and strategic projects, and projects for the development and renovation of infrastructure, the statement said.
Al Mansouri said there are a number of indicators that point to the strength of the national economy. The UAE is today the second largest Arab economy, and a recent report by the International Monetary Fund (IMF) also shows that the national economy is growing at a rate of 3 per cent.
“The national economy has grown exponentially over the past few years of our country’s small age. We’ve made great achievements that were in parallel with the overall development of the country.
Today, our national economy continues to see a balanced growth, enhancing competitiveness and overcoming obstacles such as the drop in oil prices. The economy is today driven by its own factors, while its productivity foundation is stronger, resilient and diversified,” the statement said.
The statement said that while the world is experiencing financial and monetary instability as well as an economic slowdown, the UAE is steadily moving on the path of growth and prosperity, relying on its own fundamentals to maintain a stable financial and monetary policy, placing it in a unique position in the region and the world.
Al Mansouri said that the UAE has started to benefit from the country’s economic diversification policy, has successful in moving the economy away from its full dependence on oil. The country has succeeded in building sustainable economic growth, while securing development gains, and ensuring high standards of welfare to the Emirati people for future generations.
And today, oil represents 30 per cent of gross domestic product (GDP), leaving room to more contribution from other sectors, led by the promising industrial sector which will remain a leading sector in the next transition to an economy based on knowledge, innovation and creativity.
The minister’s statement was released on Saturday in a press statement.
These statements follow similar comments made by His Highness Shaikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, who said the UAE has prepared itself from an early stage to face diverse global economic scenarios.
“Its economic policies were based on diversification away from the oil sector, building balanced relations with leading international economies and opening to foreign countries. The country’s fundamentals have helped it overcome obstacles and achieve a stronger economic performance in 2014, as well as continue this strong performance in the future,” he said.
Shaikh Mohammad’s message stressed that the UAE is one of the first oil-producing countries in the world that focused on diversifying its economy away from this sector and looked to expand national investments in a number of other sectors, including infrastructure, trade, tourism, financial and banking services, renewable energy as well as the manufacturing and precision industries. The UAE was able to increase production in these sectors and to rely on these sectors to generate income, stimulate economic growth and generate new jobs.
Figures and indicators
Indicators issued by the Ministry of Economy as well as reports from the Federal Competitiveness and Statistics Authority show that non-oil sectors today contribute to more than two thirds of UAE’s GDP. Shaikh Mohammad’s message stated that these sectors have become the main stimulator of the overall economic growth. Growth of the overall economy is at 4.6 per cent while growth in the non-oil sectors have registered 8.1 per cent in 2014.
GDP in 2014 reached Dh1.5 trillion at current prices, while the GDP at constant prices reached Dh1.15 trillion in 2014. Real GDP growth reached 4.6 per cent in 2014 and is expected to growth in 2015 by 3 to 3.5 per cent.
Non-oil sectors recorded strong growth in GDP at current prices and reached 8.1 per cent in 2014, and the contribution of non-oil sectors in the national economy reached 68.6 per cent of GDP at constant prices in 2014. This contribution is expected to reach 80 per cent in 2021 through intensive investment in the industrial and tourism sectors, air and maritime transportation, import and re-export as well as through supporting activities based on the knowledge economy.
The industrial sector also contributions 15 per cent of the country’s GDP. Al Mansouri said that the invested capital in industrial facilities in the country reached Dh127.3 billion, distributed between 6,041 facilities with a total of 433,939 employees.
Small businesses sector
Al Mansouri said that small and medium businesses are an ultimate priority to the UAE and play a vital role in promoting growth, implementing the diversification policy, and shifting to a knowledge-based economy driven by creativity and innovation, in an ultimate goal to achieve the UAE 2021 vision.
The Ministry of Economy invests all efforts to support this vital sector. Small- to medium-sized businesses are significant in supporting the national economy and in increasing competitiveness at regional and international levels.
Al Mansouri added that there are 350,000 small- to medium-sized businesses in the UAE, making up 94 per cent of the total number of companies in the country, and employing 86 per cent of the workforce in the private sector.
These businesses contribute to 60 per cent of UAE’s GDP excluding the oil sector. The UAE 2021 vision targets an increase in this contribution to 70 per cent of GDP excluding the oil sector.
Local and international reports agree that the UAE has become a key player in international trade. Upward indicators of foreign trade reflect the trade openness policy pursued by the UAE to diversify the economy.
Non-oil foreign trade has seen constant development during the period from 2004 to 2014 and enhanced the position of the UAE in world trade.
When speaking of the UAE’s direct trade, foreign trade has continued to grow at an average of 15 per cent annually, registering record highs with a threefold increase. In 2004, foreign trade was valued at Dh287 billion. It increased to Dh1.07 trillion by 2014.
Components of foreign trade also developed significantly with non-oil exports increasing from Dh14.6 billion in 2004, a 5 per cent contribution in total non-oil trade, to Dh132.2 billion in 2014, a 12 per cent contribution and a ninefold increase.
Re-export value also saw a remarkable development from 2004 when it was Dh69.5 billion to reach Dh243.7 billion in 2014. Imports also increases from Dh202.9 billion in 2004 to Dh696.4 billion in 2014.
Foreign trade in free trade zones operating in the UAE increased as well from Dh286.5 billion in 2009 to Dh560 billion in 2014.
Non-oil foreign trade including free trade zones crossed Dh1.6 trillion. According to official data and statistics, UAE’s non-oil trade amounted to Dh4.9 trillion between 2010 and 2014, divided between Dh3.14 trillion for the value of the country’s imports from various countries during the five-year period and Dh647.02 billion in non-oil exports.
The value of re-exported goods reached Dh1.09 trillion, significantly reducing the trade deficit gap.
The continuous increase in foreign trade value in the UAE over the five-year period between 2010 and 2014 reflect the policy of trade openness in an aim to diversify the economy.
Commercial exchange has also seen growth in the last five years, with non-oil commercial exchange increasing from Dh754.4 billion in 2010 to Dh927.6 billion in 2011, to Dh1.06 trillion in 2012, to Dh1.07 trillion in 2013, and further to Dh1.07 trillion in 2014.
According to those statistics, the value of exchange with the other countries increased by 0.7 per cent in 2014 compared to 2013, by 0.9 per cent in 2013 compared to 2012, by 13.8 per cent in 2012 compared to 2011, and by 23 per cent in 2011 compared to 2010.
The main driver of the increase as per the National Centre for Statistics is the increase in non-oil exchange. The UAE’s commercial exchange to GDP ratio is considered among high ratios in comparison to countries with similar economic fundamentals.
The country’s imports index during the five years mentioned rose from Dh485.4 billion in 2010 to Dh602.8 billion in 2011 and then to Dh667.5 billion in 2012. In 2013 it rose to Dh685.1 billion in and continued to rise to Dh696.4 billion last year.
Non-oil exports value increased during the past five years as well, from Dh83.1 billion in 2010 to Dh114 billion in 2011 and then to Dh169.7 billion in 2012 to fall to Dh148.2 billion in 2013 and then to Dh132.2 billion in 2014.
Re-export trade registered consecutive increases in value between 2010 and 2014 to increase the value of re-exports from the UAE to the rest of the world from Dh185.9 billion in 2010 to Dh210.8 billion in 2011 and then to Dh218.6 billion in 2012, to climb to Dh232.2 billion in 2013 and again to Dh243.7 billion in 2014.
Attracting foreign investments
Cumulative value of direct foreign investment in the UAE crossed Dh115 billion in 2014, and is expected to increase to Dh126 billion by year end 2015.
The UAE took first position among Arab countries and was 22nd worldwide in the global investment index for 2015, thanks to the ability of its sectors to attract foreign investment.