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The Economy of the United Arab Emirates
United Arab country has an open economy with a manageable annual trade and high capita income. This country has been one of the wealthiest nations globally. The United Arab Emirates has been an ever leading country among the 14 Middle East countries and overall in North Africa countries. Over six decades, the state discovered oil products in their religion, making an incredible move to transform their bottom line. However, the government has created more job opportunities among its citizens in line with expanding infrastructures. Apart from the products exported from the UAE, there have been exporting zones that trigger trade among the east and attracting more potential investors.
In the year 2015, the government improved the excise taxes on beverage products and reduced the fuel subsidies significantly in order to promote their fuel products in the entire globe. Recently the country had adopted an economic policy that deducts economic reliance on hydrocarbon products. Generally, the gas and oil sector has accounted for 40 percent of the industrial GDP. UAE has been one of the beneficiaries of the Gulf association council, stimulating the country to lower oil prices and cater to other social programs (Hasani 451). Additional manufacturing sites have been established like furniture, food staff, metal processing, and aluminum products. UAE oil products have been projected to approximately last for more than 100 years. In the 2019 budget, UAE has the highest GDP, with an increase of 18 percent compared to the past years. Recent data produced by the World Bank for UAE indicates that the “agricultural sector provides 0.7 percent of GDP a mere 0.4 percent of the workforce, as most of the country is unsuitable for agriculture and animal husbandry.
Hence around 85 percent of UAE’s food is imported. Fishing and date-growing are among the main agricultural activities.” Industries comprise of 47.2 percent of GDP, integrating 23 percent of the workforce. After the introduction of 6 percent VAT in the country, inflation was expected to rise simply due to a decline in house costs. However, the inflation rates were negative until 2020 when the whole world was hit heavily by Coronavirus pandemic (Hasani 456). It is projected that the economy will fall significantly in the next quarter due to business shutdowns and job layoffs. Economic sustainability remained constant at 18 percent in 2019 until early 2020, when the Covid-19 pandemic slowed down the global economy. 2020 growth is subject to significant uncertainty as a result of the pandemic and decline of oil prices.
Typically, UAEs standards reciprocate global reprocessing and logistics hub. The current slowdowns and business disclosure will tend to disrupt supply chains and profoundly affected non-oil products. Mitigation of economic fallout caused by Coronavirus is not only the UAE’s direct challenge but also a global dilemma. According to the “United Arab Emirates Economic Plan Update,” the following measures were put in place to enhance substantive economy: improvement of transport networks, better emirates infrastructure, and optimization of government activities. The UAE has developed trade systems and low rates of unemployment (Middle East countries depend mostly on foreign labor).
Economic Diversity in the United Arabs Emirates
Emiratization is a policy initiated to offer job opportunities among the local workforce. UAE’s sovereign wealth and Central Bank funds own the regional vital foreign assets, which provides the country with substantial liquidity cushion. By 2019, the government through Central Bank had confirmed “zero-deficit federal budget for 2020, of which 38percent had been allocated for social development and social benefits programs, 14 percent for infrastructure and economic resources and almost 15 percent for public, higher and university education program.” Financial sectors have been active with adequate state-owned banks and more than 100 banks around the country.
Government spending has contributed to a 31% output GDP of the country’s total revenue. UAE is now reaping fruits of attaining growth momentum and better living standards. Multilateral organizations have impacted the UAE economy into a point of attracting foreign capital in conjunction with domestic investments (Hasani 468). The aspect of economic diversification has resulted in incredibly developed sectors like tourism, trade, manufacturing, air transport, and alternative energy sectors. Besides, private sectors have expanded their activities to align with growing public entities. One of a corporation associated with UAE is “the Abu Dhabi National Oil Company (ADNOC) established to manage and protect gas/petroleum operation conducted in Abu Dhabi alongside with other two petroleum refineries located in UAE.
COVID-19 impacts on the United Arabs Emirates
The outbreak Coronavirus pandemic has hit hard the whole global economy. Many countries are trying to implement additional measures to mitigate the spread of the virus. When the World Health Organization declared Coronavirus as a vast world pandemic, “the Central Bank of the United Arab Emirates (CBUAE)” introduced an additional 100 billion economic stimulant to support private entities together with affected business customers. The central bank also directed local banks to deduct charges and other financial related fees (Al Darayseh n.p). The CBUAE also injected another 61 billion into commercial sectors to frequent cushion lenders and their liquidity activities. Currently, these financial institutions like Dubai Islamic Bank, Emirates NBD, and Emirates Islamic offer this relief package to the lenders.
UAE was among the first country to integrate measures mitigating the spread of Covid-19 by isolating its citizens and closing all learning institutions. Health care provision in the UAE is universal through health insurance systems mostly applied in private hospitals. The government further directed to offer free health care to any patients showing signs and symptoms of the Coronavirus. Self-isolation, social distancing, and frequent hand sanitization are some of the guidelines imposed by the World Health Organization. These regulations have led to business shutdowns and employee layoffs. With UAE being a vibrant oil leading country, his operations have being affected significantly, leading to a 14 percent GDP decrease.
The CBUAE further cushioned stimulus package to aid infant business to navigate coronavirus effects. Here are some implementations “there will be a refund of 1% of the customs duty imposed on imported goods sold locally in the UAE. Goods imported between 5 march 2020 and 30 June 2020, which are liable to customs duty at the rate of 5%, are eligible for the refund. The bank or cash guarantee deposited by existing customs brokers and clearing companies will be refunded.” The UAE government has further redirected that municipality fee induced on hotel sales to be deducted from 8% to 3% (Al Darayseh n.p). The government has also suspended all international tours until the end of the year.
There have been frequent media updates regarding the coronavirus pandemic and new measures brought into the board. Any person deviating with the set rules he/she is subjected to face the law. Due to staying at home and social distance roles, new technological measures have been put in place. There has been ordering and purchase of products online together with door delivery services. Companies have adopted online service of conducting business virtually without coming into conduct with their customers. In these abnormal times, with events canceled, training, conferences, closed air networks have led to drastic negative change, usually on small, medium, and sized enterprises (SMEs). The Ministry of Economy in the UAE revealed that the SME sector covers more than 97 percent of the entire operating companies in UAE and entirely contributes 53 percent of the non –petroleum GDP.
Utility companies in UAE have deducted water and electricity prices to relieve essential home needs during the pandemic. Businesses have announced financial support in ensuring sufficient production of medical equipment like facemasks, personal protective equipment, and the output of sanitizers. Since health workers are in the frontline to ensure affected patients receive the appropriate attention, the government has channeled adequate resources to ensure they are in safe working environments (Al Darayseh n.p). The reported Covid-19 cases in April were 3736, with 588 recoveries and 20 fatalities. As we hope for the curve to flatten and case reduce, health care workers need to be protected to prevent contaminating the virus. It is high time we embrace personal responsibility and care for each other.
Conclusion
The rapid technological and infrastructural advancement in UAE virtually represents a reputable economy. Oil products brought modernization and growth in the area, with small states acquiring their independence in 1971 as in UAE. Although most countries are deserted, oil products make up a tenth of total global oil. Abu Dhabi has the largest port in the Middle East and serves as the home of embassies and government ministries. Although Arabic is the UAE official language, English is extensively spoken. Trade routines were finally established along the gulf for Indians and the British.
Reference
Hasani, Mundhir AL. “Cultural and Economic Risks Factors in UAE Construction Projects.” INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH IN BUSINESS AND SOCIAL SCIENCES 8.12 (2018): 449-471.
Al Darayseh, Abdulla Saleh. “The Impact of COVID-19 Pandemic on Modes of Teaching Science in UAE Schools.” (2020).