Detailed Macroeconomic Study of UAE

Introduction

The United Arab Emirates (UAE hereafter ) is an admirable amalgam of an ancient cultural tradition and modern dynamism (Al- Abed and Hellyer 2001 . It has emerged as one of the leading nations of the world in commercial terms , during the recent past

The UAE is relatively new to the comity of world nations , having come in to existence almost at the dawn of 1972 (Al- Abed and Hellyer , 2001 . It is a federal union of 7 formerly separate emirates-Abu Dhabi , Sharjah Ajman , Dubai , Umm al-Qaiwain , Ra 's al-Khaimah , and Fujairah . The

br country 's population has grown 10 fold since it came in to existence The country was relatively impoverished when it came in to existence but it has succeeded in building a widespread high standard of living today , even though the population has grown so rapidly

The UAE has been a member of the World Bank since its inception as a nation (United Arab Emirates , World Bank , 2007 . The Bank has not only funded core infrastructure projects during the early years of UAE nationhood , but has served as a reservoir of expertise in guiding the country 's economists and planners in their mission to build material wealth for the citizens

This document records the facts of the economic miracles of the UAE reviews the cornerstone policies which have made such amazing achievements possible , and attempts to make cogent forecasts of the future prospects for continuing prosperity in this ancient land

PART A

Major Macro-Economic Indicators

The GDP in 2002 at 1995 prices crossed Dirham (Dh ) 226 billion (Al- Abed , Vine , and Hellyer , 2004 . The 2003 figure at constant prices was just short of Dh 242 billion , indicating a real growth of 7 . Rapid population growth has kept the per capita GDP almost static at around Dh . 60 thousand per year (Al- Abed , Vine , and Hellyer , 2004 . The GDP is expected to touch 130 billion in 2006 (United Arab Emirates , 2007 . The growth rate in this year is estimated at 8 .9 . Unemployment was just 2 .4 in 2001 (United Arab Emirates , 2007 . Overall , the macro-economic indicators establish the robust nature of the UAE economy , with equitable distribution of revenue generating activities amongst the citizens

Fiscal Indicators

The overall deficit of Dh . 29 billion in 2002 declined to less than Dh 14 billion in 2003 (Al- Abed , Vine , and Hellyer , 2004 . The 2005 budget sets a new trend by targeting no deficit (A Country Study : United Arab Emirates , 2006 . This is to be achieved by decreasing expenditure by 4 .9 while increasing spending by only 4 .5 . Deficits were as high as 11 of GDP in 2002 . This was cut sharply to 4 .5 of GDP in 2003 and just 0 .2 of GDP in 2004 . Thus , the UAE has a stellar record in disciplined government spending . The achievement is even more impressive when one considers that Abu Dhabi accounts for its oil revenues in reserves rather than in the current account . Therefore , the budgetary balancing of expenditures with incomes...