Evaluate the Dubai Economy in Terms of the Key Macroeconomic Variables

Evaluate the Dubai Economy in Terms of the Key Macroeconomic Variables

  • Submitted By: paolopaolo
  • Date Submitted: 02/13/2009 12:27 AM
  • Category: Business
  • Words: 1050
  • Page: 5
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Evaluate the Dubai economy in terms of the key macroeconomic variables

Dubai economy over the past 10 years has followed closely the same trends than the composite UAE Federal Government one with some minor differences especially with the Emirates of Abu Dhabi due to the non-oil strict dependency of Dubai GDP. Those differences will be highlighted when required.

The UAE Government has systematically implemented various strategies aiming at achieving balanced, diversified and sustainable development. The steady increase of international oil prices in recent years, despite the recent reduction of the past few months, has positively reflected on the performance of all economic sectors in the country. (Annual Social and Economic Report 2007, 2008)

UAE Gross Domestic Product (GDP) has been constantly on a steady growth to the extent that in the last decade 1997 – 2007 it is more than tripled reaching AED 729.7 billion in 2007 compared to around AED 200 billion in 1997. In 2007 GDP grew 16.8%. The oil’s contribution to the GDP has been instead diminishing during the same period until 2005 when it was only 27% of the total GDP. (UAE Macroeconomic Report, 2007)
In 2006 and 2007, due to steep increase in oil price, the overall share of oil revenue increased, reaching 35,7% of the total GDP. (Annual Social and Economic Report 2007, 2008)
We can therefore see that, to the contrary of what one might think, non-oil GDP has been the main driver of the UAE economy and this reflects UAE Government effort to unlink the economy growth from the precious but finite natural resource.
Dubai case reflects even more this strategy: in fact it is important to note that although Abu Dhabi was the main contributor to total UAE GDP (59% in 2005), almost 56% of the Emirate’s GDP was linked to oil. On the other hand, oil only contributes to around 5% of Dubai’s GDP of 2005. In 2006 and 2007 this value increased due to oil prices increase.

The above-mentioned trends can be...

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