Features of the UAE's solid economy
Despite recent fluctuations in oil prices and the global economic recession, the UAE enjoyed a stable economy. Some of the features of the UAE's economy are:
- Strategic location
The UAE enjoys a strategic location between Asia, Europe and Africa. 33 per cent of the world’s population can reach the UAE within 4 hours, and 66 per cent can reach within 8 hours.
- Strong financial reserves
Aggregate capital and reserves of banks operating in the UAE increased to AED 438.6 billion at the end of January 2023 from AED 404.3 billion at the end of January 2022.
National banks accounted for 86.5 per cent of the total capital and reserves of banks operating in the UAE, which stood at AED 379.3 billion at the end of January 2023 compared AED 350.2 billion at the end of January 2022.
Share of foreign banks in aggregate capital and reserves of banks operating in the UAE was 13.5%, reaching AED 59.3 billion at the end of January 2023, compared with AED 54.1 billion in January 2022.
- Large sovereign wealth fund
According to Sovereign Wealth Fund Institute, Abu Dhabi Investment Authority (ADIA) is the largest sovereign wealth fund in the Middle East and the 4th largest in the world with USD 853 billion of total assets and USD 790 billion of current assets.
Other sovereign wealth funds in the UAE are:
- Investment Corporation of Dubai (ICD) with current assets of USD 309 billion
- Mubadala Investment Company PJSC (Mubadala) with current assets of USD 284 billion
- Abu Dhabi Developmental Holding Company PJSC (ADQ) with current assets of USD 159 billion
- Emirates Investment Authority with current assets of USD 87 billion
- Sharjah Asset Management Holding LLC (Sharjah Asset Management) with current assets of USD 1.9 billion
- Fujairah Holding (Fujairah Holding) with current assets of USD 0.5 billion.
*Data as of May 2023
- Consistent government spending on infrastructure
The federal budget allocated for 2023 is AED 63.066 billion. AED 2.4 billion (3.8 per cent of the total general budget) is allocated to the infrastructure and economic resources.
- Progressive economic policies
The policies relating to economic diversification and circular economy continue to lead the UAE’s economy. In 2021, the non-oil sector contributed 72.3 per cent to the UAE’s GDP at constant prices.
- Free zones
The UAE has several multi-specialty free zones, which offer several economic incentives such as exemption from corporate taxes, and import/export duties, and full foreign ownership with 100 per cent profit repatriation. There are about 40 free zones in the UAE.
- Increased foreign direct investment (FDI)
According to the World Investment Report 2021, issued by the United Nations Conference on Trade and Development (UNCTAD), total foreign direct investment (FDI) to the UAE amounted to USD 19.884 billion (AED 73.04 billion) in 2020, compared with USD 17.875 billion (AED 65.66 billion) in 2019.
FDI in the UAE increased by USD 2.01 billion (AED 7.38 billion) in 2020, with a growth rate of 11.24 per cent.
The UAE received the highest FDI inflow in West Asia. It received USD 36.547 billion, equivalent to 54.4 per cent of the total inflows to the region. The FDI inflow shows an increase of 9.4 per cent compared to 2019.
Source: The Annual Economic Report 2021 (PDF, 1 MB)
Read more:
- Why the UAE is considered one of the world’s most attractive investment hubs – Ministry of Economy
- UAE Economy Overview – Ministry of Finance
Updated On :
29 Oct 2024
