United Arab Emirates flag United Arab Emirates: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The United Arab Emirates registered subdued economic performance in recent years, partly due to cuts in oil output as part of OPEC agreements, continued corporate restructuring, reduced government investment and declining real estate prices. External factors also include a slowing global economy, geopolitical tensions, weaker energy demand and the COVID-19 pandemic. After contracting by an estimated -6.1% GDP in 2020, economic growth picked up in 2021 (2.2% GDP), supported by the UAE’s early and strong health response, continued supportive macroeconomic policies and a rebound in tourism and domestic activity related to the delayed Dubai Expo 2020 (IMF). Economic growth is expected to strengthen in 2022 and 2023 (3% GDP) thanks to a recovery in oil prices and production level. Regional tensions, potentially volatile oil prices and the Omicron variant are key risks to the outlook (Focus Economics).

In 2021, the UAE’s economy recovered from the deep but temporary recession triggered by the COVID-19 pandemic, lower oil prices and reduced oil production. The UAE promptly put in place supportive measures to mitigate the effects of the crisis, and continued its accommodative fiscal policy. The successful vaccination program boosted domestic consumption, and the construction and tourism sectors were stimulated by activity related to Dubai Expo 2020, held from October 2021 to March 2022. According to the IMF, the government net borrowing improved to -0.5% GDP in 2021 (from -5.6% in 2020) and is expected to further decrease to -0.2% and -0.1% in 2022 and 2023. The public debt is low but has increased rapidly in recent years, from 20.9% GDP in 2018 to 39.4% in 2020, according to IMF estimate. It decreased slightly in 2021 (37.3% GDP) and is forecast to remain under 40% GDP in 2022 (38.6%) and 2023 (38.9%). The public debt is expected to be funded mostly by tapping into the international capital markets (Coface), although the UAE’s Central Bank and sovereign wealth funds own important foreign assets, providing the country with a large liquidity cushion (Abu Dhabi holds world's fourth largest sovereign wealth fund) and making it a net creditor at global level. The deflation observed in 2020 (-2.1%) turned into a moderate inflation in 2021 (2%) which is forecast to remain stable in 2022 (2.2%) and 2023 (2.1%) (IMF). In the context of the ambitious ‘Project of the 50’ agenda, the government took a series of measures to improve competitiveness, attract investments, modernise and diversify its economy. Structural reforms are needed to move to a more environmentally sustainable growth model.

The UAE has one of the highest per capita income levels in the world and a highly developed welfare system. It also has one of the lowest rates of unemployment in the Middle East (while Dubai enjoys the lowest unemployment level in the world, at around 0.5%) and depends heavily on foreign labour (more than 85% of the workforce). A policy of 'Emiratisation' has been launched to encourage employment of the local workforce. Nevertheless, unemployment rate among nationals continues to be considerably high compared to the rate among non-nationals (it varies according to emirate and is the highest in Abu Dhabi).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 417.22e358.87e410.16427.93443.25
GDP (Constant Prices, Annual % Change) 3.4e-6.1e2.23.03.0
GDP per Capita (USD) 43,900e38,661e43,53844,75345,670
General Government Gross Debt (in % of GDP) 27.1e39.4e37.338.638.9
Inflation Rate (%) -1.9-2.1e2.02.22.1
Current Account (billions USD) 35.3711.06e39.6440.1138.95
Current Account (in % of GDP) 8.53.1e9.79.48.8

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
UAE Dirham (AED) - Average Annual Exchange Rate For 1 GHS 0.920.840.800.710.66

Source: World Bank, 2015

 

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Latest Update: June 2022