The International Herald Tribune has described it as “centrally-planned free-market capitalism.” Oil production, which once accounted for 50 percent of Dubai’s gross domestic product, contributes less than 1 percent to GDP today.
- The UAE capital – and by far the wealthiest emirate – Abu Dhabi has also seen a population boom in the last 50 years. But there is a marked difference between the UAE’s two most successful emirates – Abu Dhabi still relies on oil for much of its wealth. Today less than 1% of Dubai’s GDP is from oil – at one time it was over half.
How much money does Dubai get from oil?
At an average oil price of $14.50 a barrel in nominal terms, the UAE has earned nearly $308 billion from crude exports between 1962 and last year. The earnings are more than four times the country’s gross domestic product of around $71 billion last year and nearly 43 per cent of the total Arab GDP. 3
Does Dubai rely on oil?
Although UAE has the most diversified economy in the GCC, the UAE’s economy remains extremely reliant on oil. With the exception of Dubai, most of the UAE is dependent on oil revenues. Petroleum and natural gas continue to play a central role in the economy, especially in Abu Dhabi.
How much does the UAE rely on oil?
As a mainstay to the economy, oil exports now account for about 30 percent of total UAE gross domestic product. In addition to being an important supplier of energy, the UAE is now becoming an increasingly relevant consumer of energy.
Is Dubai an oil based economy?
Economy of Dubai. Contrary to popular belief, Dubai does not have an oil-based economy. The little oil wealth it did enjoy between the 1960s and the 1990s was used to enhance other sectors of its economy by building physical infrastructure.
How is Dubai so wealthy?
Oil has made Dubai one of the richest states or emirates in the world. The city is the wealthy trading hub for the Gulf and Africa. Even though Dubai has little oil, the black gold has made the city rich. In less than 50 years, Its robust economy has made Dubai an affluent state admired around the world.
How do Dubai make money?
The UAE is the third-richest country in the world, below Luxembourg at number two and Qatar at number one, with a GDP per capita of $57,744. The bulk of its money comes from the production of goods and provision of services related to petroleum, petrochemicals, aluminium and cement.
How much debt does Dubai have?
London Based Capital Economics has estimated that before the end of 2024 $38 billion of Dubai GRE debt is due for repayment, much of it in 2023. Many of the debts date from the 2008-09 financial crisis. Back then, oil-rich Abu Dhabi gave Dubai a bailout helping its neighbour to support its state-controlled companies.
How did Dubai build so fast?
Discovery of oil Coupled with the joining of the newly independent country of Qatar and Dubai to create a new currency, the Riyal, after the devaluation of the Persian Gulf rupee which had been issued by the Government of India, it enabled Dubai to rapidly expand and grow.
How much money does Dubai make?
The Economy of Dubai represents a gross domestic product as of 2018 of US$102.67 billion.
How is UAE economy now?
UAE non-oil private economy continues solid growth in November: PMI. The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), inched up to 55.9 in November from 55.7 in October, which was its highest since June 2019 – boosted by Dubai hosting the Expo world fair.
What are the top 3 imports of the UAE?
United Arab Emirates main imports are: pearls and other precious metals and stones (31 percent of total imports); machinery, sound recorders, reproducers and parts (18 percent); transport vehicles (12 percent); base metals and articles thereof (9 percent) and chemicals and related products (6 percent).
Is UAE oil rich?
The United Arab Emirates holds 97,800,000,000 barrels of proven oil reserves as of 2016, ranking 7th in the world and accounting for about 5.9% of the world’s total oil reserves of 1,650,585,140,000 barrels. The United Arab Emirates has proven reserves equivalent to 299.0 times its annual consumption.
What is Dubai main economy?
Most tourists believe Dubai’s revenue comes primarily from oil but only a moderate amount of oil reserves were used to generate the required infrastructure for trade, manufacturing and tourism, in order to build up Dubai’s economy. Most of Dubai’s GDP (over 95%) is non-oil-based.
Why does Dubai have so much oil?
The most widely accepted theory for why the Middle East is loaded with oil is that the region was not always a vast desert. The oil was captured in place on the seabed by thick layers of salt. As the land in the modern Middle East region rose due to tectonic activity, the Tethys Ocean receded.
Is Dubai still growing?
Growth this year has jumped, with data for the first quarter of this year showing an 11% rise from the previous quarter, although it declined by 3.7% year-on-year.
Economy of Dubai, UAE
The economic shifts that have shaped Dubai into the metropolis that it is today are discussed here. Dubai is the second wealthiest emirate in the United Arab Emirates, behind Abu Dhabi, which serves as the country’s capital. In addition to being a major commerce and tourism attraction, the city’s port (JebeL Ali) serves as the regional hub for export trade in the Middle East. Since the establishment of the Dubai International Financial Centre (DIFC) in 2004, the city has grown into a global centre for service sectors such as information technology and finance, among others.
The non-oil sector accounts for the vast majority of Dubai’s GDP (more than 95 percent).
These statistics illustrate why Dubai has transformed its economy into one that is more dynamic and diverse in order to survive the depletion of fossil resources.
The Burj Al Project (Burj Al Arab Hotel), which began in 1994 and is intended to be a long-term plan with the goal of becoming Dubai the world’s premier tourist destination, provided the economy reason to be optimistic.
- Some of Dubai’s most important investments have been severely hampered as a result of the worldwide economic downturn that has recently taken place.
- As a result, the majority of its ongoing projects, as well as the jobs of its expatriates, were adversely affected.
- Dubai has also positioned itself as a global technology hub that provides services to areas such as finance and information technology.
- Due to a promising growth rate of 6.1 percent in 2014, Dubai appears to be on its path to become one of the Middle East’s fastest-growing economies.
- By 2014, China has been regarded as Dubai’s most important commercial partner, followed by India and the United States.
- In 2018, Dubai had 15.93 million tourists, maintaining its position as the world’s fourth most popular tourist destination overall.
Due to the fact that the city is home to approximately 250 gold businesses, Dubai is appropriately known as the ‘City of Gold.’ Dubai has been awarded the proposal to host the much-anticipated Expo 2020, which would provide a significant boost to the local economy and is estimated to generate more than 270,000 jobs.
From fishing village to futuristic metropolis: Dubai’s remarkable transformation
As the world’s tallest skyscraper when it’s finished, the rocket-shaped Dubai Creek Tower will surpass the Burj Khalifa, which is located just a few miles away. The Dubai Creek Tower, rising over the city’s skyline, is shown in architectural detail. Image courtesy of Emaar This latest addition to the Dubai skyline is extravagant and showy, and it is characteristic of a city that was nothing more than a fishing town only a few decades ago, according to the World Bank. With its foundation in oil and real estate development, Dubai has emerged as the globalized financial capital of the United Arab Emirates (UAE), serving as a regional center for commerce, tourism, and financial services.
- It has become synonymous with massive projects such as man-made islands, the world’s biggest natural flower garden, the world’s tallest ferris wheel, and the world’s most opulent hotel, among others.
- Photo courtesy of REUTERS/Karim Sahib/Pool Oil is the foundation of the structure.
- Because it was easily accessible from all over the world, the population exploded in the decades that followed, with the majority of the growth being driven by foreign migrants.
- Image courtesy of Reuters/Satish Kumar Abu Dhabi, the capital of the United Arab Emirates and by far the wealthiest emirate, has seen a population surge in the previous 50 years.
- Oil contributes less than 1% of Dubai’s GDP now, although it used to account for more than half.
- Having said that, Dubai is also constructing a massive coal-fired power plant, which will be the first of its kind in the United Arab Emirates.
What is the Annual Meeting of the Global Future Councils?
The Annual Meeting of the Global Future Councils will take place in Dubai from November 3-4, 2019, and will be a massive brainstorming session. It brings together more than 600 members of the World Economic Forum’s Network of Global Future Councils – leaders from academia, business, government, and civil society – to discuss global challenges and opportunities. The conversations will encourage creative problem-solving to solve the most pressing issues of our day, as well as developing or cross-cutting issues relating to the Fourth Industrial Revolution, among other things.
Dubai’s economy has not been functioning well in recent years, despite the seeming wealth on show in the city.
Image courtesy of the Financial Times Despite Dubai’s efforts to diversify its economy, much of the city’s present challenges can be traced back to the collapse in oil prices that occurred in 2015.
A number of emirates, including Abu Dhabi, are making attempts to diversify their economies, with a particular focus on expanding their non-oil knowledge-based industries.
In some of the country’s least developed districts, the government is providing loans and promoting investment as well as ecotourism. The opinions stated in this article are solely those of the author and do not reflect those of the World Economic Forum as an organization.
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Dubai’s economy shows promising growth after slumping 11% last year
Photographs by Frantic00 | iStock | Getty Images DUBAI, United Arab Emirates — DUBAI, United Arab Emirates — According to figures from the Dubai Statistics Center, Dubai’s GDP declined by 10.9 percent year on year in 2020, indicating a city that was heavily damaged by the coronavirus epidemic and the suspension of worldwide tourism. 3.4 million people live in Dubai, which serves as the commercial hub of the United Arab Emirates. The city’s economy is primarily reliant on businesses including as hospitality, tourism, retail, and travel, all of which suffered significant setbacks during the first year of the epidemic.
- However, growth has accelerated this year, with figures for the first quarter of this year indicating an 11 percent increase from the previous quarter, despite a 3.7 percent fall year-on-year.
- Travel and tourism remained below pre-pandemic levels, but the two largest sectors of the economy — wholesale and retail trade and financial services — experienced year-on-year growth of 2.8 percent and 3.5 percent, respectively.
- As much of the globe increases security precautions in the wake of the COVID-19 coronavirus epidemic, Dubai remains open for business, marketing itself as a sunny, quarantine-free getaway – despite a dramatic increase in cases.
- AFP |
- KARIM SAHIB |
- Getty Images When Dubai opened its doors to tourists again in July of 2020, it was one of the first cities in the world to do so following an extremely stringent lockdown that saw citizens locked to their houses and only allowed to leave with permission from the police.
- After becoming a hotspot for visitors seeking a return to normalcy in the winter months, the emirate became a no-go zone for numerous nations, including the United Kingdom, after an outbreak of Covid infections in February.
- Analysts at Dubai-based bank Emirates NBD wrote in a note released Monday that they expect annual GDP growth to rebound from last year’s low annual base starting in Q2 2021.
- Although “travel restrictions have eased in recent weeks,” the bank expects growth to accelerate in the fourth quarter.
In terms of the entire United Arab Emirates, the report predicts “whole UAE GDP growth of 1.9 percent this year, up from -6.1 percent earlier.” A rise in international tourism, combined with one of the world’s fastest vaccination campaigns, positions the United Arab Emirates to see increased tourism numbers during the winter months of the fourth quarter, when warm weather and relaxed Covid restrictions are expected to attract visitors from colder climes.
Expo 2020, Dubai’s six-month mega-event that has been delayed by a year owing to the epidemic, is expected to be a big tourism attraction, according to the city.
Real estate recovery to be uneven
Meanwhile, the real estate industry, which had already been in decline for several years when the pandemic began, is seeing a robust but uneven recovery, which has been exacerbated in part by what many market analysts consider to be excessive construction. The disparity between supply and demand in the real estate market has been increasingly apparent because Dubai’s majority-expatriate population declined by 8.4 percent in 2020 as a result of the pandemic, the highest population loss in the Gulf area to yet.
Foreigners may now live and work in Dubai without having to partner with a local company, according to visa and business changes implemented by the emirate.
As a result of the epidemic, the World Expo 2020 in Dubai will start a year late in October, which will likely be beneficial to the real estate sector, according to the S P analysts.
Saudi Arabia, UAE could be slowly ‘de-anchoring’ from oil price movements, data suggests
On February 21, 2021, a Saudi Arabian female employee serves a customer at a hypermarket in the Saudi Arabian port city of Jeddah that has recently been opened by the operator LuLu and is managed entirely by female employees. Image courtesy of Amer Hilabi | AFP | Getty Images DUBAI, United Arab Emirates — DUBAI, United Arab Emirates — Business activity in major Gulf economies such as Saudi Arabia and the United Arab Emirates is on the rise, with clear positive outlooks for non-oil growth as the region recovers from the effects of the coronavirus pandemic and the ensuing crash in oil prices that occurred early last year, according to the International Energy Agency (IEA).
- In October, Saudi Arabia had its 14th consecutive month of non-oil private sector growth, while the United Arab Emirates experienced its highest increase in business activity and new orders in almost two and a half years.
- MUFG’s Ehsan Khoman believes that this is a sign of major shift in the region’s economies — as well as a potential warning that certain oil producers may be building more resilience to crude price volatility in the near future.
- However, “non-oil development is a critical driver of this recovery; industries like as financial services have emerged from the epidemic in a position of strength,” according to the latest Middle East Economy Watch published by consulting company PwC on Wednesday.
- For the first time since 2014, the International Monetary Fund predicts that the Gulf Cooperation Council as a whole would reach fiscal balance in 2023, according to its prediction.
- Photo by Fayez Nureldine for AFP and Getty Images.
- And, despite a minor decline to 57.7 in October, economists believe the overall picture of economic activity remains positive.
According to Khoman, while the headline PMI rates have fallen in recent months, they are still at very healthy levels in the firm high 50s, indicating that the non-oil economy is rebounding at an impressive rate.
Expo will be critical for important industries in the emirate, including as transportation and tourism, and the increase in demand has been assisted by Dubai’s continuing easing of Covid limits. Moreover, Qatar’s PMI reached a new high of 62.2 in October, up from 60.6 the previous month, and the country’s prices “increased at their highest rate since March,” according to the Capital Economics. The relaxation of Covid limitations in the small gas-rich state has also resulted in an increase in activity and demand.
Oil is still king
There is no doubt that the Gulf countries would not be in such a positive position if it were not for the dramatic increase in oil prices since the outbreak of the pandemic — international benchmarkBrent crude has risen by more than 60% this year alone — which has occurred since the outbreak of the pandemic. Within months following the collapse of oil prices in 2020, the Saudi Kingdom increased its value-added tax (VAT), increasing it from 5 percent to 15 percent. Although Saudi Arabia’s purchasing managers’ index (PMI) continues to be strong, Tarek Fadlallah, Middle East CEO of Nomura Asset Management, cautioned that “the distortions induced by the epidemic may be at play.” The long-term forecast for the non-oil industry seems quite good, but he cautioned that the country was still in the early phases of economic diversification.
The date is October 12, 2019.
The good news is that governments’ attempts to diversify their economies away from hydrocarbons are gaining ground, as seen by the increase in positive results.
Additionally, prices are rising — “the production price component in Saudi Arabia surged to its highest level since August last year,” Swanston reported, indicating that inflation is expected to accelerate in the near future.
Why Is the City of Dubai so Rich?
Taking a look across the marina from the Marina Walk|EmaarOil was found inDubaijust over 50 years ago, but it barely amounts for one percent of the country’s total profits today. So, what is it about the city of Dubai that makes it so prosperous? For most of the period from 1770 until the late 1930s, the pearl business was the primary source of revenue in the Trucial States, which are now included into the United Arab Emirates today. Pearl diving was a humble beginning in the profession for people of the peaceful fishing communities of the Persian Gulf, but it laid the groundwork for something far more significant later on in their lives.
- The ruler of Dubai, Sheikh Rashid bin Saeed Al Maktoum, began investing in infrastructure in 1958 and finished the country’s first airport in 1960 with loans totaling tens of billions of dollars from international financial institutions.
- Dubai began shipping oil in 1969, and it was one of the United Arab Emirates’ seven emirates by 1971, when it gained independence from Great Britain and became one of the country’s seven emirates.
- The city established its first free zone in 1985, known as Jafza, the Jebel Ali Free Zone, which is the largest in the world at 52 square kilometres (20 square miles).
- Alamy Stock Photo: Jumeirah Public Beach in Dubai|JB-2078 / Alamy Stock Photo Jafza enterprises account for around 20% of foreign investment in Dubai, and the estimated 144,000 employees generate approximately $80 billion in non-oil revenue.
- It is the third-richest country in the world, after Luxembourg at number two and Qatar at number one, with a GDP per capita of $57,744, placing it behind only Luxembourg and Qatar.
This company’s primary revenue comes from the manufacture of items and the delivery and support services in the fields of petroleum, petrochemicals, aluminum, and cement.
Dubai – Economy
Contrary to common opinion, Dubai’s economy is not centered on oil exports or consumption. Because of the little amount of oil income it had between the 1960s and the 1980s, it was able to invest in other sectors of its economy by constructing physical infrastructure. Commercial activity continues to be at the heart of the city’s economy, with the city owning and running two of the world’s most important ports, as well as an active international air freight hub. It was founded in the 1980s to attract industrial investment; operations based there include aluminum smelting, automobile manufacture, and cement production.
Finance and other services
The number of initiatives designed to attract foreign investment has expanded in the twenty-first century. In recent years, many free zones, such as Jebel Ali, have been developed in Dubai, allowing international enterprises to operate there without the requirement for a local partner. Many of the firms are from Europe or North America, and the largest of these is home to more than 6,400 enterprises, the majority of which are located in the largest of these. As early as the 1990s, the city began promoting itself as a high-end tourist destination, devoting a major portion of its gross domestic product to lavish resorts and attractions.
The Dubai International Financial Centre, which opened its doors in 2006 and is designated as an independent legal jurisdiction in the United Arab Emirates constitution, operates under a separate commercial and civil framework based on English common law and is governed by the Dubai International Financial Centre Regulations.
Using Dubai’s geographic location as a bridge between key financial centres in Europe and East Asia, these enterprises may save travel time between the two continents.
A loan of $10 billion from Abu Dhabi enabled Dubai to avoid defaulting on its debts, and the real estate market recovered quickly as a result of the financing.
Embark on a journey aboard an anabra, a water taxi in Dubai. Water taxis in Dubai, United Arab Emirates, are the subject of this topic. Contunico is a trademark of ZDF Enterprises GmbH, Mainz. View all of the videos related to this topic. For walkers, Dubai is not an inviting city due to its broad motorways, hot heat, and reliance on air conditioning all year. As a result, vehicular traffic may be particularly heavy in Dubai. However, in the early twenty-first century, new bridges, highways, and a fully automated, driverless metro train system have all helped to alleviate the hassles of getting about the metropolis.
The Dubai-owned airline, Emirates, which runs a big and sophisticated fleet of aircraft, has had a significant positive impact on the tourism industry.
Administration and society
Located in the United Arab Emirates, Dubai Municipality is one of the major government agencies in the nation. It is overseen by a director general, who in turn reports to the chairman of Dubai Municipality, who is also a member of the royal family of the country. The director general is responsible for six sectors and 34 divisions, which collectively employ over 11,000 people. The municipality is not only responsible for the administration of city services, but it is also a major contributor to economic development in the emirate.
A number of other services, such as rubbish collection, have been criticised for lagging behind in keeping up with the city’s population expansion. A significant amount of effort has gone into the development and maintenance of parks and public spaces, with the city significantly increasing its number of green spaces in the 2010s.
For individuals who have private medical insurance, health care in Dubai is typically of a high grade, with various private facilities, such the American Hospital Dubai, on hand to accommodate their needs. There are a handful of extra hospitals that are run by the government for individuals who do not have insurance.
The education system is divided into two parts: the private and the public sectors. The majority of public schools educate in Arabic, whilst the majority of private schools and all institutions teach exclusively in English. Two institutions, the American University in Dubai (founded in 1995) and Zayed University (founded in 1998), have established solid reputations in the region. The majority of the employees are foreign nationals, with a considerable share hailing from North America.
Dubai’s art and film sectors grew in the early twenty-first century, with the annual Art Dubai exhibition presenting contemporary art and the Dubai Foreign Film Festival promoting both local and international films. It is housed in an 18th-century stronghold and has relics and exhibits that are relevant to the region’s early history and traditional culture. Dubai’s public library system is comprised of various branches located around the city, as well as a number of bookstores located in the city’s major shopping malls.
These have significantly improved the city’s reputation as a tourism destination.
There is still a clear division in the city’s media industry between government-backed television and newspapers, the majority of which are heavily censored, and foreign media companies that have established branch offices in Dubai Media City, a purpose-built complex that serves as a regional international media hub.
The BBC and the Associated Press are two examples of the latter, and their production is not subject to local constraints in most cases.
Having grown from its modest origins as a tiny fishing town, which was first mentioned in the 18th century, the city expanded fast as it became a significant center of the pearl-diving business. Due to the city’s entrepreneurial royal family’s efforts to lower taxes and welcome international merchants, the city flourished even more in the early twentieth century and quickly established itself as a re-exporting centre for Persia and India. The UAE’s capital, Dubai, continued to focus on commerce and investment throughout the later part of the twentieth century, channeling oil surpluses into significant infrastructure projects such as an international airport, dry docks, and a trade center.
The need for professional, educated foreign employees was widespread, and many chose Dubai for its tax-free pay and relatively stable political environment.
Christopher Davidson is a writer who lives in the United Kingdom.
The Most Successful Oil Economy That’s Moving Away From Oil
When people talk about oil-dependent economies, they frequently conjure up images of some unnamed Middle Eastern country that is nearly exclusively reliant on its oil exports to generate cash. However, there is one Middle Eastern country that wants to commemorate the export of its final barrel of oil, which will occur one day. The Emirati Khalifa University announced last week that it had installed a first-of-its-kind solar concentrator in the smart city of Masdar, boasting that the facility had a concentration ratio of a thousand suns and could generate temperatures of more than 1,000 degrees Celsius.
- The United Arab Emirates does not want to be remembered as a country that is just known for its oil production and nothing else.
- The United Arab Emirates is already home to some of the world’s most impressive luxury real estate, including the world’s tallest skyscraper and the Palm Islands, but the country is also making significant investments in technology and renewable energy.
- It was intended that Masdar City will be a sustainable community with a population of 50,000 people.
- The city has a 40 percent lower water and energy demand than regular buildings in Abu Dhabi, as well as a 10-MW solar farm that generates 17.4 GWh annually, which offsets 15,000 tons of carbon dioxide, and a wind tower that captures cool winds and directs them to a public space in the city.
- Overall, according to the project’s website, Masdar City might result in the creation of 40,000 employment and student placement opportunities.
- The usage of solar energy is more cost effective than the use of a traditional gas plant.
- We still require backup power, no matter how many megawatts we have, and we are investing in research and development, such as energy storage.” Indeed, more and more people with an interest in the renewable energy industry are becoming aware of the reality of energy storage technology.
In order to stay ahead of the curve, the Emirates is putting emphasis on storage from the beginning.
Is it even feasible?
According to government figures from the previous year, oil and gas exports accounted for about 30 percent of the country’s gross domestic product (GDP).
Nonetheless, it appears that the UAE is prepared for it.
The government adopted a budget for this year of $16.7 billion (61.35 billion dirhams) last year, with a zero-deficit target established in the budget paper.
The fact that the United Arab Emirates is really working on diversification rather than just talking about it is also clear in the list of the most in-demand vocations for this year.
These positions include digital transformation managers, artificial intelligence developers, and security analysts.
Growth in the oil industry, on the other hand, is expected to stagnate.
This will very definitely take more than a couple of years to complete.
However, it is unquestionably preferable to rely on more than one industry for the health of your economy.
Regardless of how long it takes the UAE to reach the point where it no longer need oil to maintain its economy, the country is moving in the right way. Irina Slav writes for Oilprice.com. Additional Recommended Reading From Oilprice.com:
- China Coronavirus Could Push Oil Down By $3
- Why Trump Can’t Resign From The Middle East
- Oil Falls Despite Major Outage In Libya
Gulf states will take at least 10 years to end oil dependence – Moody’s
On October 12, 2019, a Saudi Aramco employee observes work at the company’s oil plant in Abqaiq, Saudi Arabia. Maxim Shemetov for Reuters
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DUBAI, United Arab Emirates, June 21 (Reuters) – According to Moody’s, countries in the oil-exporting Gulf will remain largely reliant on hydrocarbon production for at least the next 10 years, despite efforts to diversify economies since the 2014-2015 oil price shock, which has made little headway. The reliance on the energy industry would be the “key credit restriction” for the six nations that make up the Gulf Cooperation Council (GCC), according to a research released on Monday by Moody’s Investors Service.
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ABU DHABI (Reuters) – The United Arab Emirates is preparing to host the World Cup this summer. According to Moody’s, countries in the oil-exporting Gulf will remain largely reliant on hydrocarbon production for at least the next 10 years, despite attempts to diversify economies since the 2014-2015 oil price shock, which has made only modest headway since then. The ratings agency stated in a report released on Monday that the Gulf Cooperation Council’s (GCC) six member countries’ reliance on the energy industry will be a “key credit restriction.” In the event that oil prices continue at $55 per barrel, the report predicts that hydrocarbon production would remain the single greatest contribution to GCC sovereigns’ GDP, the primary source of government revenue, and, as a result, the primary driver of fiscal strength for at least another decade.
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Davide Barbuscia contributed reporting. Raissa Kasolowsky is in charge of the editing. The Thomson Reuters Trust Principles serve as our benchmarks.
The strive for oil-independence: Transforming from an oil-driven to a data-driven economy
A historic transformation is taking place in the Arab Gulf States, as they aim to lessen their reliance on crude oil and natural gas while also diversifying their economies. In order to achieve genuine economic diversification, the Gulf nations must develop sectors, industries, and businesses that can exist and grow on their own, rather than relying solely on oil and natural gas earnings. By implementing innovation acceleration programs, UAE officials are encouraging technology businesses to collaborate with government agencies to produce not just projects, but also services that assist in the drafting of legislation and policy.
After all is said and done, the Gulf states can stimulate economic development that is not reliant on government subsidies or oil and gas income.
In the GCC countries, most of the private-sector activity is still related to government contracts and expenditures, which are in turn funded by oil and gas earnings.
While the Gulf Cooperation Council (GCC) countries have made some progress over the last decade, oil and gas production as a percentage of gross domestic product (GDP) remains above 40% in most countries, particularly the United Arab Emirates (30%) and Bahrain (18%), and much of the region’s other economic activity, such as construction and infrastructure development, is supported by oil and natural gas revenues.
The new Special Fund for Finance and Innovation, which is named after Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s vice president and emir of Dubai, provides capital to innovators, start-ups, and incubators in an attempt to catapult the UAE into the world of innovation as they seek to diversify their economies away from oil and improve their global standing.
- The Central Bank of Bahrain is in charge of the financial services sector, with its governor Rasheed Mohammed Al Maraj adopting an innovative mindset to promote the country as a fintech hub in the region.
- The COVID-19 pandemic had a significant impact on the economy of the Middle East, exacerbating the fundamental problem of unemployment in the area and contributing to the rise in poverty levels throughout the region.
- These two shocks have increased the urgency of lowering the influence of oil on government expenditure and transitioning to an economic development model based on innovation, education, basic skills, and private investment in technology rather than on natural resource extraction.
- The Gulf states are increasingly being swept away by the global data revolution, and they are undergoing a transformation from an oil-driven economy to a data-driven economy.
- It is imperative that governments collaborate with national actors, the local private sector and international organizations in order to transfer regulatory procedures to a regional level, therefore making it simpler for enterprises to conduct business in several nations.
- A series of ambitious proposals to restructure their public and commercial sectors in order to deliver dependable, rapid, and efficient public and private services were proposed by Gulf governments throughout the previous decade.
- According to SuneetiAhuja Kohli of the Khaleeji Times, the United Arab Emirates has always maintained a philosophy of not regulating for the sake of regulating.
- This transformation will be possible because of the region’s innovation history.
- Approximately $320 billion will be contributed to the Middle East economy by artificial intelligence over the next 10 years, according to PWC estimates.
Several areas, such as innovative education and medical sectors, as well as economic security through the adoption of digital economies and blockchain technology, are highlighted in the strategy, which aims to stimulate innovation, strengthen the national economy, and improve the well-being of citizens.
- The United Arab Emirates has risen to become the most significant hub of the digital economy in the Arab world, and it aspires to become a worldwide center of technological innovation in the near future.
- With Jordan being one of the early adopters of technological start-ups, the country has committed significant resources to boosting economic growth through digitization, including establishing the first Digital Economy Ministry in the Arab world.
- The digital wave, which has resulted in the region’s economy being credited with excellent GDP growth rates, has caused governments to develop projects such as Smart Cities, Smart Tourism, Digital Healthcare, Classroom of the Future, and SmartGovernment to address the issue.
- Over the past few years, the Middle East’s top economies have taken moves to modernize and expand its infrastructure.
- The digital economy offers countries who invest in infrastructure the potential to sow the seeds of future start-ups and innovative firms by leveraging their investments.
- It is expected that the formation of the UAE as a major provider of regional digital regulatory standards as well as the development of specialized know-how will assist the UAE economy in a similar fashion.
- The introduction of Amazon Web Services (AWS) in the Middle East and United Arab Emirates (UAE) region, according to the Abu Dhabi Investment Office (ADIO), will boost Abu Dhabi’s digital economy in the first half of 2022.
- As Dubai proceeds along its digital path, it will not only establish itself as a technology leader, but it will also be positioned to gain from shifts in the global digital economy as a result of these efforts.
- In general, digital technologies are expected to contribute to the economic and social development goals of the Arab strategy for the digital economy by laying the groundwork for those goals.
- It is possible to discover critical gaps in technology skills and basics by comparing indicators of the digital economy in the United Arab Emirates with standards for innovation centers.
As a result of factors such as the development of e-commerce, improvements in information technology infrastructure, increasing penetration of internet services and the use of smartphones, the expansion of electronic payment systems, as well as significant government support for digital transformation, the United Arab Emirates is expected to strengthen its position in the digital economy.
They must confront the dangers directly if they are to take a leading role in determining the future of digital economies and rely on them as a foundation for their economic development.
The shortage of experienced IT specialists to assist businesses in digitizing their operations, as well as a lack of investment in technology, continue to be the most significant obstacles to the development of the digital economy in the UAE. a few more paragraphs
- In this article by Nader Kabbani, he discusses the long road to economic transformation in the Gulf. In this article by Dan Murphy, he discusses how the oil-dependent United Arab Emirates is investing big on tech start-ups and artificial intelligence. Paul Shumsky predicts the following for FinTech in the Middle East by 2021: The role of oil and gas firms in the energy transition, by Robert J. Johnston, Reed Blakemore, and Randolph Bell, presented at the Global Energy Forum: A Strategy Blueprint for the Development of the Arab Digital Economy Ali Al-Khouri contributed to this article. The World Bank’s Economic Update for the Middle East and North Africa (MENA) includes: In the Middle East and North Africa, Digital Transformation and COVID-19 present a significant opportunity. ByManuel Langendorf According to Alexander Farley, the digital industry in the UAE will develop at a quicker rate than the rest of the economy. The data center industry is comprised of the following: The new oil fields in the Gulf Cooperation Council by Ahmed El-Masry: Creating a Link Between Innovation and Legislation in the UAE’s Digital Economy by Sam Blatteis:
- The UAE is dedicated to doubling the size of its digital economy in the next ten years, according to a top official by Suneeti Ahuja Kohli:
Economic Development of the United Arab Emirates on JSTOR
Information about the Journal Since its inception in 1964, Middle Eastern Studies has become a must-read for everyone who is serious about comprehending the modern Middle East and its people. Specifically, Middle Eastern Studies provides the most current academic research on the history and politics of the Arabic-speaking countries of the Middle East and North Africa, as well as Turkey, Iran, and Israel during the nineteenth and twentieth centuries, as well as the history and politics of the Arab-speaking countries in North Africa.
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UAE cuts 2021 federal spending by 5.3% on low oil prices, COVID-19
Highlights In 2020, the United Arab Emirates had the largest budget ever. The federal budget does not include the budgets of Abu Dhabi, Dubai, and Sharjah. The United Arab Emirates is the third largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Dubai is a city in the United Arab Emirates. In response to low oil prices and the COVID-19 pandemic, the UAE, OPEC’s third largest producer, has reduced its federal spending for 2021 by 5.3 percent, the government announced on Nov.
The UAE had previously announced a record budget this year, but the government announced a 5.3 percent reduction for 2021.
Receive daily email notifications and subscriber notes to help you make the most of your experience. Now is the time to register. The federal budget of the United Arab Emirates has been reduced to dirhams 58.113 ($15.8 billion) for 2021, and the government “will continue to implement major projects and focus on social development sectors, despite the global economic conditions,” according to a statement from the media office of Sheikh Mohammed bin Rashid, the UAE’s vice-president and prime minister, as well as the ruler of the city-state of Dubai.
The budget for 2020, which totals Dirhams 61.35 billion, is the greatest in the country’s history, and it is 2 percent larger than the budget for 2019.
“With the goal of achieving the fastest economic recovery possible, the 2021 budget has been created to handle economic developments without jeopardizing national development aspirations, and we look forward to more accomplishments in the next year,” Sheikh Mohammed said in a statement.
While the federal budget of the seven-member United Arab Emirates federation includes funds for Abu Dhabi, Dubai, and Sharjah, the three largest emirates with their own budgets, the federal budget does not contain funds for the other six members. The International Monetary Fund predicts that the UAE’s GDP would fall by 6.6 percent this year as a result of low oil prices and the spread of COVID-19 virus. In 2021, the economy is predicted to rebound with 1.3 percent growth. According to the International Monetary Fund, the UAE’s breakeven oil price, which is required to balance the budget, will be $75.90 per barrel in 2020 and $66.50 per barrel in 2021.
According to the most recent S P Global Platts OPEC+ survey, the UAE produced 2.54 million barrels per day in September, which was lower than its 2.59 million barrels per day limit, in order to make up for overproduction in August.
The United Arab Emirates boasts one of the world’s most open economies. These welcoming business and trade practices date back to early Gulf history when ships sailed from the Persian Gulf to India and along the coast of East Africa as far south as Mozambique. The United Arab Emirates (UAE) continues to be a strategic hub, with business-friendly free zones and a rapidly expanding economy. The UAE’s gross domestic product (GDP) for 2019 was $421 billion. This reflects the abundance of natural resources in the UAE, which has 10 percent of the world’s total oil reserves and the world’s fifth largest natural gas reserves.
- In addition to being a significant energy supplier, the United Arab Emirates is quickly becoming a significant consumer of energy as well.
- In recent years, the federal and individual Emirate governments have made significant investments in sectors such as renewable energy, aluminum production, tourism, aviation, re-export commerce, telecommunications, and advanced technologies.
- Young people are at the center of these forward-looking projects, taking on crucial leadership roles in industry, government, research, and a variety of other fields of endeavor.
- Tourism has played a significant role in the success of the UAE’s economic diversification.
- Global RecognitionThe United Arab Emirates (UAE) will be home to the World Expo in 2021, drawing visitors and industry leaders from all over the world.Recognized LeadershipThe UAE boasts one of the most open and dynamic economies in the world.
AT Kearney ranked the UAE as one of the top 25 best places in the world to deliver business services to global companies in 2019, and the UAE is ranked in the top 30 on the World Economic Forum’s “most-networked countries” list—ahead of all other Arab countries as well as countries such as Italy, Turkey, and India.
The Business Council now has over 100 members from both nations, representing a diverse range of industries.
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