Economy
The UAE is the second largest in the Middle East after Saudi Arabia in terms of GDP which reached the 414.179 billion US Dollars (at market prices) in 2018 and has one of the most open economies in the world and they continue to be a strategic hub, with business-friendly free zones. The country has experienced significant economic growth. The average growth of the GDP of the UAE for the period 2000 to 2006 was about 8.4%, the highest in the Gulf Cooperation Council, which averaged 6.5%.
Abu Dhabi holds the biggest percentage (96%) of UAEs 97.8 billion barrels oil resources and is followed by Dubai which holds an estimated 2 billion barrels, while the remaining five Emirates have 1.9 billion barrels of oil. The UAE holds approximately 6% of the world’s proved oil reserves and is the 12th biggest oil producer in the world. The leading national company in the energy field is the state-owned oil company Abu Dhabi National Oil Company (ADNOC), which controls 5 subsidiaries in the field of Exploration & Production of oil and gas and 7 in the field of Processing and Refining.
In 2016, according to the U.S. Energy Information Administration (EIA), the UAE was the fourth-highest petroleum producer in OPEC behind Saudi Arabia, Iraq, and Iran, and produced 3.7 million barrels per day (b/d) of petroleum and other liquids, of which 2.9 million b/d was crude oil and the remainder was non-crude liquids.
The crude oil production maintained these levels of approximately 3 million b/d in 2018, but the exports were reduced to 2,296,500 b/d of crude oil and 916,000 b/d of petroleum products and non-crude liquids compare to 2016, when the exports of crude oil were more than 2.5 million b/d of which 96% was exported to Asia, 2% to Africa, 2% to other clients. The UAE has total refining capacity of 1,124,000 b/d at its four refineries a) Ruwais with 817,000 b/d refining capacity, b) Jebel Ali with 140,000 b/d refining capacity, c) Umm Al-Narr with 85,000 b/d refining capacity and d) Fujairah with 82,000 b/d refining capacity.
The Summer of 2019, Brooge Petroleum & Gas Investment Co. and Sahara Energy Resources DMCC, awarded a contract to SENER group from Spain and Audex Pte. from Singapore to build a new oil refinery with 250,000 b/d capacity in Fujairah a coastal city located at the Gulf of Oman.
The refinery of Fujairah is the only one of the UAEs outside the Gulf and the Strait of Hormuz, a chokepoint where daily oil flow accounts for 21% of global petroleum liquids consumption, and the construction of the second refinery will be completed in the first quarter of 2020. The port of Fujairah has 17 oil terminals which allow the simultaneous load of many tankers. Currently the port has several storage facilities that belong to the companies Vopak, Vitol and Mercuria, which can contain 10 million cu m (62.9 million barrels), divided into 3 million cu m of crude oil and the 7 million cu m of oil products.
The port of Fujairah is crucial for the economy of the UAE. Recently the new Habshan–Fujairah oil pipeline was inaugurated, allowing the Emirates to export 1.5 million barrels of oil per day from the Habsban oil field to the international market from the facilities of the port of Fujairah without any limitation. Furthermore, the UAE and Oman plan to build a jointly operated refinery in the Duqum special economic zone located in Oman, some 627km south of the port city of Fujairah that would have a capacity of 230,000 bbl/d.
On the other hand, the UAE lacks in new oil discoveries and for this reason EOR (Enhanced oil Recovery) techniques have been adopted, in order to extend the lifespan of the Emirates’ existing oil fields. By improving the recovery rates at the existing fields, the UAE nearly double the proved reserves in Abu Dhabi over the past decade. Although UAE holds the seventh-largest proved reserves of natural gas in the world, more than 215 trillion cubic feet (Tcf) (6.088 trillion cubic meters TcM), since 2008 is a net importer of natural gas from Qatar via the Dolphin Gas Project’s pipeline.
The UAE had to import natural gas from Qatar for two reasons, a) the use of its natural gas as part of EOR techniques in order to extend the lifespan of the Emirates’ existing oil fields and b) the use of natural gas for the production of electricity and the significant expansion of UAE’s electricity consumption. Furthermore, the UAE’s natural gas has a relatively high sulfur content that makes it highly corrosive and difficult to process.
The country’s Gross Domestic Product (GDP) in 2018 was AED 1,521.07 Billion/US$414.17 Billion (AED 1,422.46 Billion/US$392.77 Billion at constant 2010 prices) increased by 9.65% compared to the GDP of 2017, (1.7% increase at constant 2010 prices compared to the GDP of 2017) when it reached AED 1,387.1 Billion/US$377.7 Billion, (AED 1,417.98 Billion/US$386.1 Billion at constant 2010 prices)
Excluding the oil sector, the GDP of the UAE during 2018 was US$307.049 Billion. According to the official government data, in 2018 the national oil sector valued AED 393.436 Billion (US$107.14 Billion) at current prices, which represented the 25.86% of the total GDP of the country and AED 432.11 Billion/US$117.66 Billion at constant 2010 prices, which represented the 29.95% of the total GDP at constant 2010 prices of the country.
Regarding the sectors of the UAE economy that in 2018 have important contribution to the national GDP (at constant 2010 prices AED 1,442.46 billion/US$392.77 Billion) these are:
• Mining and Quarrying (includes crude oil and natural gas) - AED 432.11 Billion/US$117.66 Billion (29.95% of the total GDP at constant 2010 prices)
• Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles - AED 166.73 Billion/US$45.4 Billion (11,55% of the total GDP at constant 2010 prices)
• Manufacturing – AED 122.07 Billion/US$33.23 Billion (8.46% of the total GDP at constant 2010 prices)
• Construction – AED 121.89 Billion/US$33.19 Billion (8.45% of the total GDP at constant 2010 prices)
• Real Estate Activities – AED 84.93 Billion/US$23.12 Billion (5.88% of the total GDP at constant 2010 prices)
• Transportation and Storage – AED 78.73 Billion/US$21.44 Billion (5.45% of the total GDP at constant 2010 prices)
• Information and Communication – AED 42.98 Billion/US$11.7 Billion (2.98% of the total GDP at constant 2010 prices)
• Electricity gas and Water Supply Waste Management Activities – AED 40.13 Billion/US$10.92 Billion (2.78% of the total GDP at constant 2010 prices)
• Professional, Scientific and Technical Activities – AED 36.11 Billion/US$9.83 Billion (2.5% of the total GDP at constant 2010 prices)
• Accommodation and Food Service Activities – AED 32.49 Billion/US$8.84 Billion (2.25% of the total GDP at constant 2010 prices)
• Administrative and Support Service Activities – AED 25.47 Billion/US$6.93 Billion (1.76% of the total GDP at constant 2010 prices)
• Human Health and Social work Activities – AED 17.16 Billion/US$4.67 Billion
• Education – AED 13.84 Billion/US$3.76 Billion (1.19% of the total GDP at constant 2010 prices)
• Agriculture, Forestry and Fishing – AED 10.18 Billion/US$2.77 Billion (0.7% of the total GDP at constant 2010 prices)
• Activities of Households as Employers – AED 8.81 Billion/US$2.39 Billion (0.61% of the total GDP at constant 2010 prices)
• Arts, Recreation and Other Service Activities – AED 7.56 Billion/US$2.06 Billion (0.52% of the total GDP at constant 2010 prices)
The total value of the exports and re-exports of goods (FOB) of the UAE in 2018 was US$316.923 Billion, of which
• Crude oil exports valued US$34.146 Billion,
• Petroleum Products exports valued US$21.100 Billion,
• Gas exports valued US$7.951 Billion,
• Other exports valued us$40.654 Billion U.S,
• Free Zone exports valued US$71.150 billion and
• Re-Export valued US$140.920 Billion.
The total value of the exports of goods and services of the country for 2018 was US$388.754 Billion (value of exported goods US$316.923 Billion + value of services US$71.831 Billion). The total imports (FOB) of the UAE for 2018 was US$235.371 Billion and the Trade Balance (FOB) for this year was US$81.552 Billion. Trade Balance (FOB) of the country for 2018 was US$81.552 Billion.
The Gross National Income in 2018 at current prices was AED 1,468.17 billion (US$416.167 Billion) while the real GDP per Capita of the UAE reached US$41.010 in 2018, increased by 5.77% compare to the GDP per Capita achieved in 2017 (US$38.770) although the best ever year for the population of the country was 2014 when the GDP per Capita reached the astonishing amount of US$44.370.
Although the country is rich on energy resources like gas and oil, the diversification economic policy implemented since the 1980’s, has reduce the dependency of the UAE on this field. In 2017, more than 29.6% of UAE’S GDP (at constant 2010 prices) was directly based on the energy industry (Crude Oil and Natural Gas), while the rest was based on:
• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles (11.70%),
• Financial and Insurance Activities (8.60%),
• Construction and Building (8.40%),
• Transformative Industries (8.30%),
• Public Administration and Defense; Compulsory Social Security (5.80%),
• Real Estate Activities (5.70%),
• Transport and Storage (5.40%),
• Electricity, Gas and Water (3.20%),
• Information and Communications (2.90%),
• Professional, Scientific and Technical Activities (2.60%),
• Accommodation and Food Services Activities (2.20%),
• Administrative and Support Services Activities (1.90%)
In 2010 the Government launched 'Vision 2021' a plan to achieve a diversified and sustainable economy.
This 10-years economic-social plan aims according to the leaders of the country to make the UAE one of the best countries in the world by the year 2021 when the UAE would celebrate the Golden Jubilee of its formation as a federation. The Government is focusing on the UAE becoming the economic, touristic and commercial capital for more than two billion people. To achieve this, the Government has set 12 Key Performance Indicators (KPIs).
They are:
• Non-oil real GDP growth
• Gross National Income (GNI) per capita
• Net Inflow of Foreign Direct Investment as a percentage of GDP
• Global Competitiveness Index
• Share of UAE nationals in the workforce
• Ease of Doing Business Index
• Emiratisation Rate in the private sector
• SME's contribution to non-oil GDP
• Global Entrepreneurship and Development Index (GEDI)
• Global Innovation Index
• Share of 'knowledge workers' in the labor force
• Research and development expenditure as a percentage of GDP.
Furthermore in 2012 the Government launched the Green Economy Policy. Under this initiative the UAE will try to become a global hub and a successful model of the new green economy. The target of this new policy is the enhancement of the competitiveness and sustainability of the economy while preserving the environment for future generations. The initiative includes a range of development programmes and policies in the fields of energy, agriculture, investment and sustainable transport as well as new environmental and construction policies.
The new policy includes six fields:
• Production and use of renewable energy
• Encourage investments in green economy and to facilitate the production, import, export of green products and technologies
• Development of urban planning policies that preserve the environment and raise the environmental efficiency of housing and building
• New policies that promote organic agriculture maintain biodiversity and protect the ecological balance
• Rationalization of the use of water resources electricity and natural resources and recycle waste
• Development and promotion of green technology
On 30th and 31st of January 2016 government officials assembled to discuss ideas and initiatives about the post-oil phase of the UAE and prepare a roadmap that would contribute in diversifying the economy of the country ensuring sustainability with an emphasis on human capital, knowledge and innovation. The new policy should strengthen the competitiveness of the current economic sectors and introduce new sectors.
Although the UAE has a stable source of revenues from its energy industry to “fuel” its economy the Foreign Direct Investment for the year 2017 was US$10.4 Billion with an average growth rate of 1.6% during the period 2012-2017.
The UAE was ranked first among the countries in the Middle East and Africa to attract Foreign Direct Investment. In addition to that the UAE Central Bank in December 2018 had total assets of AED 417.7 Billion compared to AED 406.4 Billion in December 2017 and the Sovereign Wealth Fund of the country is the fifth largest in the world with US$792 Billion.