Macroeconomic Analysis of the United Arab Emirates
The Middle East is famous for its riches, both in the abundance of gold and petroleum. However, one of the most prominent countries in the middle east, especially in the GCC is none other than the country in which the city of gold is situated, The United Arab Emirates. The UAE is one of the wealthiest countries in the GCC. It is the home to many world records, and it has proven to be a very prominent country in the export of many goods and services, which led to the upcoming of the country in a very short span of time. The UAE was formed on 2nd December 1971 by six emirates coming together to form a union and a seventh emirate shortly after on 10th January 1972. UAE is considered the top exporter of petroleum, and it remains one of their main economic strengths among tourism and gold.
In this project, we will be looking in-depth into UAE macroeconomic factors and bring out the major economic determinants and cost of living in the country.
Detailed Analysis
- Gross Domestic Product (GDP)
Observe the GDP tabular column. In the tabular column, it is very evident that throughout the course of 2000 to 2019, the GDP value has increased by a significant value of over 303%, which is pretty good considering for a country that is not that big in size but has shown tremendous growth. When we observe the graph, the spike from 2000 to 2008 is very evident. However, there is a downfall in 2009 of just over 19%, but in 2010 it increased by 14%. Through this, it is quite evident that even though there are increases and decreases in the GDP, on an overall analysis, it is evident that it has shown a respectable economic performance within the country.
- Gross National Product (GNP)
When we observe the GNP values of the United Arab Emirates, there is an increase of just over 7% in the GNP value in just a year from 2000 to 2001, and immediately after that, the change is very small as it is just an increase of 1% to 2002. However, from 2003 to 2008, we can notice that every year there was a good increase in the value of GNP with over 13% each year. The most commendable increase in the GNP growth rate in observation of nineteen years was in the year of 2006, where there is an increase of over 21%. In the graph, it is very evident that there is an upward trend, but just after from 2008 till 2010 the graph does not show any significant changes. After 2014 the graph shows a downward trend, and it continues till 2017, and from there, the value of GNP increases at a slow pace.
- Gross National Income (GNI)
The Gross National Income (GNI) values, when analyzed, you can see that there is an increase in the values from 2001 till 2008, right after a dip in 2001. The increase in values of the GNI is of significant values, and in the year 2006, there was an increase of 23.62% compared to 2005, which already had an increase of 23.54% compared to 2004. The biggest decrease in the value of GNI was in the year 2009 where there was a significant drop of 19.76% from 2008. When the graph is observed, there is a small downward slope from 2000 to 2001, but after that, an upward slope continues till 2008. However, after 2008 there is a considerable dip in the graph due to the 19% decrease in 2009. From 2011 to 2014, the graph looks almost like a straight line due to only a small change in the GNI values. Just after 2014, there is a dip in the graph due to the 10.87% decrease in the value of GNI from 2014. The graph ends with a slight downward slope due to the decrease in the GNI value from 2018 to 2019 by 0.101%.
- Consumer Price Index (CPI)
For the analysis of the Consumer Price Index (CPI) of UAE, I have analyzed monthly CPI data for three years with the base year taken as 2014. From my analysis, I observed that on a monthly basis, the Consumer Price Index value did not have a significant change. The changes were mostly under 1%. The month with the most change in the CPI value was from December of 2017 to January of 2018. The Consumer Price Index value increased from 109.36 to 112.29, which is an increase of 2.6%, which is a good increase in just a month. When you notice the table and the graph, you can observe that there is a constant decrease in the value of the Consumer Price Index from September of 2018 till March of 2019. When you calculate the Consumer Price Index for the whole year by adding all the monthly values of the Consumer Price Index for a year and dividing it by twelve, you find out that among the three years of 2017, 2018, and 2019, 2018 had the highest Consumer Price Index value of 111.1 compared to 2017 with 107.8 and 2019 with 109.0.
- Exports
The United Arab Emirates has excellent trade relations with other countries, and it has been a valued member of the World Trade Organization (WTO) since 1996. UAE is a very significant trade hub. The United Arab Emirates exports many commodities globally. However, their main commodities for export are crude oil, natural gas, re-exports, dried fish, and dates. The United Arab Emirates main countries for export are Japan, which constitutes 17.10%, followed by India with 13.60% and Iran with 6.90% and South Korea with 6.10%, and Thailand with 5.10%. For analyzing the export data of the United Arab Emirates, data from the year of 2000 to 2019 was analyzed. When the data was analyzed, I observed that from the year of 2002 till 2012 exports were increasing at a staggering rate with 7% at the least in 2002 to over 35% increase at the most in the year of 2004 with an exception in the year of 2009 where there was a significant drop in the exports with a decrease of over 18%. From 2013 to 2019, there was an increase and decrease in the export value, but the change was not of significant values as the increase and decrease were under 10% in the course of six years. When the graph is observed, there is an upward trend till the year 2008 from 2001 however due to the 18% decrease in 2009 there is a noticeable downward trend of the line graph for the one particular year. The most noticeable downward spike in the graph after the year of 2009 is in the year 2015, where the value of exports took a 9.99% hit, due to which the graph shows a downward trend till 2017.
- Imports
The United Arab Emirates has taken great initiatives to diversify their economy. Moreover, the imports and exports of commodities have helped them achieve this goal. The main commodities imported by the United Arab Emirates are transport equipment, chemicals, machinery equipment, and food. The main import partners for the United Arab Emirates are India with 17.50% of import which is followed by China with 14% of import then by the United States of America with 7.70% of import and then comes Germany with 5.60% of import and then, at last, comes Japan with 4.82% of Import. To analyze the import data of The United Arab Emirates, the data from the year 2000 to 2019 is analyzed. When the table is observed, we can notice that the growth rate is rarely on the negative side. The imports are at a high increase rate from the year 2000 to 2008. In the year of 2007, the imports increased by 47.10% compared to 2006. The highest fall in the import of goods was in the year 2009 where the imports decreased by 14.82% compared to 2008. When the graph is observed there is an upward trend observed till 2008. However, in 2009 due to the 14.82% decrease, there is a downward trend in the graph for the one particular year. Then the graph has an upward trend till 2014, but after 2017 the graph has a downward trend.
Overall the trade statistics of The United Arab Emirates looks good because in no place is the value of the imports more than the value of the exports, which concludes that within the year 2000 to 2019, UAE has a trade surplus or, in other words, a positive trade balance.
- Cost of Living
To analyze the cost of living in the United Arab Emirates, the Consumer Price Index report put out by the Federal Competitiveness and Statistics Centre of UAE was analyzed. When the Consumer Price Index reports by the Federal Competitiveness and Statistics Centre of The United Arab Emirates was analyzed, it was noticed that housing, water, electricity, and gas remains to be the highest expenditure by the residents in the country, which is followed by transportation and then by food and beverages.
Conclusion
The United Arab Emirates has a decent economy, and they were in their prime economic growth rate from the year 2000 till the year 2008. However, it is very evident that due to the great recession of 2008, the economy started to slow down, and all the major macroeconomic variables took a hit in 2009. Due to the Great Recession, the economic growth started to slow down, and this is quite evident through the graphs. When the graphs are observed, it is noticeable that the growth rate from 2009 to 2019 is not at pace as it was in 2008 / 2009.
References
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2. Annual Report 2019. (2021). Retrieved 1 February 2021, from https://www.centralbank.ae/sites/default/files/2020-04/AnnualReportENG2019.pdf
3. Exports of Goods and Services for United Arab Emirates. (2021). Retrieved 1 February 2021, from https://fred.stlouisfed.org/series/AREBXUSD
4. GDP (current US$) — United Arab Emirates | Data. (2021). Retrieved 1 February 2021, from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2019&locations=AE&most_recent_year_desc=false&start=1975&view=chart
5. GNI (current US$) — United Arab Emirates | Data. (2021). Retrieved 1 February 2021, from https://data.worldbank.org/indicator/NY.GNP.MKTP.CD?locations=AE
6. GNI, Atlas method (current US$) — United Arab Emirates | Data. (2021). Retrieved 1 February 2021, from https://data.worldbank.org/indicator/NY.GNP.ATLS.CD?locations=AE
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8. Open Economy | UAE Embassy in Washington, DC. (2021). Retrieved 1 February 2021, from https://www.uae-embassy.org/uae-us-relations/business-trade/open-economy
9. Statistics by Subject. (2021). Retrieved 1 February 2021, from https://fcsc.gov.ae/en-us/Pages/Statistics/Statistics-by-Subject.aspx#/%3Ffolder=Economy/Prices/Consumer%20Price%20Index
10. UAE GNP 2000–2021. (2021). Retrieved 1 February 2021, from https://www.macrotrends.net/countries/ARE/uae/gnp-gross-national-product
