Dubai Business School: BECN 225 Macroeconomics Report Analysis

This report provides an analysis of the Dubai economy, focusing on key macroeconomic indicators and trends. It begins with an introduction to the report's purpose, which is to enhance understanding of GDP, unemployment, interest rates, and inflation, supported by data from the Dubai Economic Re...Read More

Economics
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Macroeconomics

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Contents
Introduction......................................................................................................................................2
Question 1........................................................................................................................................3
Question 2........................................................................................................................................5
Question 3........................................................................................................................................8
Question 4........................................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The purpose of the report is to enhance the understanding related to GDP (output),
unemployment, interest rate as well as inflation rate. The understanding of the terms of
economics is supported with the recent Dubai economic report 2018.

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Question 1
Global, Regional & Dubai Growth Trends: - In the year 2017, the world economy has
contributed to the strengths with the increase in the real global output by approx. 3.7%. Dubai is
known as one of the diversified economic base as well as composition with the growth rates
majorly for the international trading partners. For instance, the emirates are growing faster
comparing it with the global output from the year 2012 to 2015 (Dubai Economy). However,
from the year 2016, the growth of Dubai has lagged begins in the rest of the world.
(Source: Dubai Economy)
In the report, this is clear that the growth of the economic performance in 2017 that has been
influenced by its exposure to conditions related to economic in the region that it resides and to
prospects of related to major trading partners which include Saudi Arabia, Oman, Kuwait, and
Iraq.

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Dubai regional exposure to these the specific trends will offer the aid to emirates growth if the
country continue to provide the advantages from the organisation oil prices and also leads to
expectation of the annual growth of approx. 1.9% in the year 2018 and 2019 (Dubai Economy).
Global & Regional Trade & Financial Developments: - Considering the views of the world
trade organisation (WTO), the growth rate merchandise the volume of trade which accelerate in
the year 2017 to 4.7% from 1.8% the year before.
(Source: Dubai Economy)
The table given above shows the foreign trade ratio to GDP % in 2017 of Dubai which is approx.
321 which is comparatively higher than the countries like Germany, USA, UAE and many other.
This ratio shows the ratio of value of imports plus the amount of total exports as the proportion
of GDP.
In the report, this has been witnessed that Dubai is an open economy while talking in terms of its
participation among the global capital markets that can easily attract the cross-border capital
flows. The economic activity of Dubai is strongly affected by the trends majorly in the regional
as well as the global because it is easily available for the international trade.

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Question 2
Dubai’s Gross Domestic Product (GDP): - In the report, this has been found that the GDP of
Dubai’s GDP is reached on AED 389.4 billion (US $106.1 billion) in the year 2017 which shows
the increase from the year 2016 as they registered with 2.8% from AED 378.8 (US $103.2
billion). Overall, UAE grew with 0.8% in 2017 but Dubai is considered as one of the country that
is equipped with relatively diversified economic base rather than the other GCC nations (Dubai
Economy).
(Source: Dubai Economy)
GDP per capita (income) in Dubai: - GDP per capital in Dubai is equal to approx. US$ 35,630
in the year 2017 which shows the decline by 6.8% from the amount of US$38.22 thousand in the
year 2016.

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(Source: Dubai Economy)
The table related to the data of Dubai real GDP is presented below that it has been declining
since the year 2013. The reason behind the decline in the GDP growth rate is due to the rise in
the population growth (Dubai Economy).
Performance of the Main Sectors in Dubai’s Economy: - In the year 2017, this has been found
that there are majorly seven of the sectors that are accounted collectively majorly for the 76.5%
of GDP which is actually less from their shares in the year 2016. The sector, which is majorly
contributing to the GDP, include wholesale, retail as well as motor cycle repair with approx.
26.6%. The major sectors that contribute also include transport and accommodation. It has been
found that these sector are growing strongly as transport and storage sector are increasing
strongly to 4.5% with this the accommodation as well as the food sector has registered more than
tripled to 8% due to presence of the tourism activities in Dubai (Dubai Economy).

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(Source: Dubai Economy)
In addition to this, the major sector that has shown the improvement in the growth is construction
that was decline in the year 2016 and has registered the growth in the year 2017 that evidence
that it has reached approx. 3.5%.
Inflation and consumption: - In the year 2017, the general annual rate of the price inflation in
Dubai was equal to approx. 2.1%. It has been found that the rate is steadily declining from an
annual rate of approx. 3.7% in the year 2015 and approx. 2.9% in the year 2016. In the report,
this is clearly mentioned that the rates of inflation are declining in the following years once
reaching at a rate of minus 1.7% in the year 2012. The decline in the rate of price inflation in
Dubai in the year 2017 which can attribute to drops in per year rate of price that increase within
the different sectors. The housing, water as well as the electricity per year cost is declining
tremendously from 4.5% in 2016 to 0.9% in 2017 that is below the general rate of inflation
(Dubai Economy).

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(Source: Dubai Economy)
The above image shows the inflation rate within the major expenditure groups that are present in
Dubai. The inflation rates are decline in 2017 for sectors like education, health, food, and
beverages. On the other hand, the restaurants and hotels show the rise in the inflation rates.
Question 3
Foreign Trade Performance of Dubai: - The foreign trade performance of Dubai is important
to be considered. The total value of direct foreign trade fell traditionally to AED 828.7 billion in
the year 2017 from the amount of 830.1 in the previous year. This has been found that in Dubai,
the value of both import and exports decline by approx. 3.2% and 4.5% in the year 2017 (Dubai
Economy). The major factor that leads to the drop in the value of Dubai’s trade from the year
2015 onwards occurred in the period which results in decline in the global demand while the
regional demand was hit by the oil prices in slump areas (International Monetary Fund).
Dubai’s Foreign Trade Structure & Patterns: - The foreign trade flows of Dubai include both
imports as well as exports that are concentrated majorly in terms of commodities as well as

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geography. The commodity structure of the value of Dubai’s total trade include the major three
groups of the commodities that are majorly accounted for more than 66% of the trade from
foreign countries in the year 2017. The tree groups, which are structured and involved in exports,
include Machinery, tools, equipment’s, electronics, and appliances.
Dubai’s Main Trading Partners: - In the report, this has been found that the geographical
distribution related to the foreign trade is also concentrated with the huge percentage of trade
conducted among Dubai as well as the small number trade partners. In 2017, this was found that
Dubai majorly deals with China, India, US, and Saudi Arabia that is equal to approx. 32.2% of
total trade of Dubai. This has been found that trade with India is considered as the second largest
trading partner which will grew by similar rate to reach AED 99.4.
Dubai’s Foreign Trade in 2018: - In the report, this has been found that total value of
international merchandise trade has continue to rise in first half of 2018 with increase in direct
trade and free zones to AED 645 billion comparing it to the AED 640 billion in the same period
in the year 2017 (Dubai Economy).
Intra-Trade between Dubai and GCC Countries: - In the year 2017, Trade between Dubai
and other GCC countries which is valued at AED 127.4billion which approx. 10%. It can be
concluded that trade between Dubai with the rest of GCC had increasing rapidly up to 2016,
rising by third from 2012 until declining prices oil inhibited regional demand.
Question 4
In the year 2017, this has been found that UAE unemployment increased to 2.46% from 1.64%
in 2016. The unemployment is high in UAE because the companies are hiring the labours from

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different countries so that they can work in UAE. This affects the opportunities for the people
present in the market of UAE. Comparing it with Singapore, the unemployment rate is slight or
negligible less as it is 2.1% in the year 2017 (World Bank).
This has been found that GCC countries, UAE, and many other countries are also dealing with
the issue of youth unemployment that is a complex situation. This has been found that in 2012,
UAE found 21.5% women and 8.4% men are unemployed in the market. Comparing it with the
other countries GCC like Oman, Bahrain, Saudi Arabia, UAE and Qatar, it has been found that
Saudi Arabia, Bahrain and Oman has high unemployment with 55.5%, 32.3%, and 30.6%
respectively (World Economic Forum).
This also reflects the employment situation that is present in GCC and a UAE country, which
shows that there are many young women, are unemployed while comparing it with men. This has
been found that comparing UAE with the other countries there are more the employed people
who include young women and men instead of other countries.

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Conclusion
In the end, it can be concluded that the major macroeconomics and other economic factors are
discussed in the report based on Dubai economic condition.

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References
Dubai Economy. Dubai Economic Report 2018, 2018. Web 12th April 2019,
<http://www.dubaided.ae/StudiesAndResearchDocument/Dubai-Economic-Report-2018-
Full-Report.pdf>
International Monetary Fund. United Arab Emirates. Web 12th April 2019,
<https://www.imf.org/en/Countries/ARE>
World Bank. Unemployment, total (% of total labor force) (national estimate), 2018. Web 12th
April 2019, <https://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?
end=2018&locations=US&start=2000&view=chart>
World Economic Forum. Introduction, 2018. Web 12th April 2019,
<http://reports.weforum.org/rethinking-arab-employment/introduction/?
doing_wp_cron=1555071515.3439319133758544921875>