Unemployment, Inflation and GDP of UAE

Running head: UNEMPLOYMENT, INFLATION AND GDP OF UAE
Unemployment, Inflation and GDP of UAE
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UNEMPLOYMENT, INFLATION AND GDP OF UAE1
Table of Contents
Introduction................................................................................................................................2
Literature Review.......................................................................................................................4
Gross Domestic Product.........................................................................................................4
Inflation..................................................................................................................................5
Unemployment.......................................................................................................................5
Interest rates...........................................................................................................................6
Trade balance.........................................................................................................................6
Analysis......................................................................................................................................7
Gross Domestic Product.........................................................................................................7
Unemployment.......................................................................................................................9
Inflation................................................................................................................................10
Conclusion and Recommendation............................................................................................11
References................................................................................................................................13

UNEMPLOYMENT, INFLATION AND GDP OF UAE2
Introduction
The economy of UAE is known as a tribal federation consisting seven emirates
occupying southeastern portion of Arabian Peninsula. The nation is considered to have one of
the most secure economy in the world. The oil dependent economy controls nearly 98 billion
barrels of oil which constitute 10 percent of total oil reserve of the world. The country also
has reserve of 212 trillion cubic feet of natural gas. This is the fourth largest amount of gas
reserve in the world only after Russia, Qatar and Iran (Alfaki & Ahmed, 2017). The economy
has utilized its natural resources and strategic location for becoming one of the wealthiest and
most modern economy in the world. The economy has explored both petroleum and non-
petroleum sector. Economic growth of UAE is mostly contributed from high oil price. Oil
also provides UAE government one major source of revenue for financing different
infrastructural projects.
The main occupations of people in UAE include fishing, pearling, commerce and
others. The economy is highly dependent on imported technology and technological
assistance. Because of very hot climate of UAE, there are only few regions of UAE which is
suitable for large scale farming. The economy has invested huge amount of money for
irrigation and advanced technology. Despite this, the economy is unable to produce sufficient
amount of basic commodities. As a result, UAE has opened up its economy.
Today UAE is an open economy having high per capita income. The economy
successfully maintains sufficient amount of trade surplus annually. The nation has made
efforts to reducing dependency on oil sector (Dhabi, 2016). Successful efforts towards
economic diversification has have helped to reduce share of oil and gas sector in the GDP to
30 percent.

UNEMPLOYMENT, INFLATION AND GDP OF UAE3
Since the discovery of reserved oil back to 60 years, the economy has undergone
significant transformations. This shifts UAE from a small developed region of desert
principalities to a modern state having high living standard. Government has made
considerable efforts to promote employment in the nation. Government expenditure has been
increased for creating new jobs. Focus has also been given on expansion of infrastructure and
encourage involvement of private sector for greater job opportunities. In order to encourage
export, the economy has 100 percent free trade zone that allows foreign ownership up to 100
percent along with zero taxes in order to attract investment from abroad.
The economy faced a recession in 2009 due to the global financial crisis in 2008-09.
During this time assets price were deflated. The monetary authorities of UAE tried to tackle
the situation by raising spending and increasing flow of liquidity in UAE’s banking sector.
The global financial crisis hit the hardest to the economy of Dubai because the economy was
highly exposed to the volatile real estate market (Zahlan, 2016). Dubai lacked the needed
cash to fulfill debt obligations adding to concern regarding solvency of banking sector. Dubai
economy finally recovered crisis by taking $20 billion from central bank UAE for bailout.
Dependency of the economy on oil sector is one long term challenge for the economy.
The low prices of oil have caused the economy to reduce expenditure which include some
social programs as well. UAE however possessed sufficient assets to cover the deficit.
Among the non-oil sector, the most important sector is tourism. Other non-oil sector
contributing to the economy are construction, expansion of manufacturing sector and
gradually growing service sector. Today UAE has become second largest economy in the
Middle East.
Table 1: Overview of UAE economy
Statistics
GDP $424.635 billion (nominal)