The UAE Diversifies it Economy
The United Arab Emirate (UAE) is diversifying its economy by dethatching itself from oil. It is estimated that the UAE will be completely independent from the oil sector by 2021.
The International Monatery Fund (IMF) decreased the estimated economic growth of the UAE, due to plunging oil prices. In line to the IMF’s most recent report, the UAE’s GDP will mark a growth of 3.5% during 2015 and 2016. The forecasted percentage growth rate is one percent lower than the rate that was originally forecasted during the previous year.
According to the IMF’s report, Abu Dhabi, which is very reliant on hydrocarbon profits, is anticipated to mark a 3% economic growth. The emirate’s non-oil based economy will mark a 5.5% growth this year. The IMF report also revealed that Dubai’s economy is estimated to mark a 4.5% and 4.6% growth rate in 2015 and 2016 respectively.
Even though the price of oil is fluctuating around the $60 per barrel, experts claim prices may plunge even further due to the excess of oil supply that exists in the market at the moment. During this year, prices of oil reached the lowest they have been during the past six years.
No matter the case, the UAE assure that their dependency on oil has decreased drastically over the last years. The UAE has feverously tried to create a diversified non-oil based economy, and it seems that all the hard work is paying off. Even though the drop of oil prices is challenging, the UAE did not succumb, as its economy is stronger than ever.
Presently, 30% of the UAE’s GDP is attributed to oil profits. A few decades ago, oil revenues contributed about 90% to the UAE’s GDP. If oil prices plunged three decades ago, the UAE would have been in the middle of a crisis, but today the UAE views the drop of oil prices as a challenge they will go through without being greatly affected.
It is anticipated that oil revenues will contribute merely 5% to the UAE’s GDP by 2021 attributable to its diversified economy. The UAE’s economy maintains strong and healthy thanks to its efforts to expand other areas of the economy such as education, security, and health as well as business diversity. Some experts claim that the UAE will not have any carbohydrates 50 years from now, which is a concept the government of the country is contemplating. Generally, the UAE has invested and expanded in other areas and sectors of the economy. For instance, the country’s industrial sectors have showed great expansion due to companies such as Strata, a well-known corporation, which specializes in manufacturing aircraft parts. Other sectors of the economy, such as tourism and aviation are also showing remarkable progress. Dubai’s airport was designated as the busiest international airport in the world, whereby approximately 70 million travelers visited it during 2014.
It is also important to mention the UAE’s nuclear programme. After the completion of the nuclear project, it is anticipated that it will supply ¼ of the UAE’s power. The first plant will be ready by 2017.
Although the drop of oil prices caused fear, the UAE has gone through more severe situations, like the 2008 crisis. Before the price of oil plunged to the ground in 2008, they were extremely high. Regardless, of the financial crisis that hit the UAE, the country somehow succeeded in moving past all obstacles that arose and developed once again into a strong economy. The UAE planned and invested in key sectors, establishing it in the position it is today.