The UAE will host Expo 2020!
  • Arabic
Supported by the UAE National Media Council
We are in the process of developing and improving our website, and we invite you to participate in our brief survey to measure the level of your satisfaction
Satisfaction Survey For UAE Interact Website
رغبة منا بالتعرف على مستوى رضاكم عن موقعنا وبهدف تطويره وتحسينه، فقد قمنا بتصميم استبيان سريع لقياس مدى الرضا عن موقع دولة الإمارات العربية المتحدة روعي في تصميم الاستبيان أن يكون قصيرا وسريعا كي لا نطيل عليكم، وعليه نرجو منكم التكرم باستكماله عن طريق الرابط التالي
استبيان رضا المتعاملين عن موقع دولة الإمارات العربية المتحدة

Economy - National day 2001

posted on 30/11/2001: 1570 views

As the 30th UAE national Day approaches, the country's economy is sound and strong and is capable of withstanding the impact of recent developments and the consequent slowdown in the global economy and decline in oil prices, according to senior officials. 'Although the Global Economic Outlook shows slowdown in the world economy and decline in oil prices in the aftermath of the September 11 terrorist attacks, we believe the UAE economy has shown in the past its soundness and strength in sustaining growth', said Dr. Mohammed Khalfan bin Khirbash, Minister of State for Finance and Industry. He cited several reasons for this, including the UAE's stable political climate, prudent macroeconomic policies, diversification of the economic base and the contribution of non-oil activities to the economy, contribution of the private sector to development, the government's contribution to accelerating economic growth and the soundness of the UAE's finance and monetary policies.

Dr. Khirbash said that over the past decades, the UAE, under the leadership of H.H. President Sheikh Zayed bin Sultan Al Nahyan, has achieved strong economic growth. 'The strong economic performance can be attributed to the prudent macroeconomic policies, the attractiveness of the investment climate, the development of modern and state of the art physical infrastructure, political and social stability and a transparent a legal and regulatory framework,' Dr. Khirbash said. The Minister said the UAE had adopted the rules of a free economy since its creation, where market mechanisms play the main role for the allocation of resources, diversifying the economy and expanding non-oil exports.

There are no restrictions on trade and there is free movement of capital, while the pegged exchange rate has served as a nominal anchor for the economy. 'The (US) Heritage Foundation has ranked the UAE economy as the second freest in the Arab world and 13th worldwide',' he added. He also referred to the diversification of the economy, which has led to a decline in the relative importance of the oil sector. 'Oil share in the GDP fluctuated in recent years, between 22 to 34 per cent, depending on the price of oil in the international market,' he said. 'In this framework, the UAE economic policy which seeks to reduce reliance on oil, has played an important role in limiting the impact of oil price fluctuations,' Dr. Khirbash said.

Eid Mohammed Al Maraikhi, Board Chairman of the UAE Central Bank, said the UAE has continued to diversify its economic base to reduce the adverse impact of fluctuations in world crude oil prices, although earnings from oil exports are still the main source of income for the federal budget. 'The government is determined to give the private sector a greater role in national economy by paying special attention to promising sectors that are expected to contribute more share to the GDP such as tourism, manufacturing industries, IT and finance,' he said. He added that the UAE had made remarkable achievements in socio-economic development. He said profits of commercial banks operating in the country had risen to Dh4.8 billion in 2000 from Dh3.4 billion in 1999. ' Banks are expected to make suitable profits (this year) although interest rates were low in 2001.

The issuance of the law of the Emirates Securities and Commodity Authority, and the anti-money laundering law were the most spectacular achievements in the monetary sector, he said. He also referred to the important role played by the free zones in the country's development strategy to diversify and liberalise the economy. There are currently ten free zones in the country and they have been successful in attracting a large number of companies and foreign direct investments, as well as expanding net non-oil exports. 'The share of free zones in the total non-oil exports increased from 22 per cent in 1999 to 57 per cent last year. The net exports of free zones have also risen, reaching 1.4 billion US dollars in 2000. Currently, there are more than 3,000 companies operating in the free zones, with an estimated trade of around 8 billion dollars and investment of 4 billion dollars, Khirbash said.

Outside the free zones, the UAE has also succeeded in establishing an attractive climate for investment, the Minister said. In a recent statistical study on intra-GCC investors, the UAE was rated as the first by attracting 16,544 GCC nationals with economic and commercial activities, he added. UAE Gross Domestic Product grew by 20.4 per cent in 2000 to Dh241.9 billion, boosted by higher oil revenues and boom in business and economic sectors, the UAE Central Bank annual report said. The report said that the UAE economy had made remarkable performance last year on back of higher oil crude prices. ' Rise in government income from oil exports has reduced deficit in the government consolidated financial account,' the report said.

Contributions by non-oil sectors, it said, rose to Dh159.9 billion in 2000, accounting for 66.1 per cent of the GDP from Dh151.1 billion in 1999, accounting for 75.2 per cent of the GDP. The value of commodity sectors surged to Dh140.4 billion in 2000 from Dh104.4 billion in 1999. Share of these sectors in the GDP were 58 and 52.1 per cent in 2000 and 1999 respectively. 'Output of the oil and gas sector rose 64.6 per cent to Dh82 billion in 2000. Contribution to GDP rose from 24.8 per cent in 1999 to 33.9 per cent in 2000 due to the hike in average oil prices from 17.6 dollars a barrel in 1999 to 27.2 dollars a barrel in 2000, an increase of 54.5 per cent,' the report said. The report outlined that GDP per capita had soared 13.8 per cent to Dh78,000 in 2000 from Dh68,000 in 1999. Per capita consumption also rose by 2.4 per cent in 2000. The balance of payments achieved a surplus of Dh10.4 billion in 2000, registering an increase of 85 per cent over 1999. On the monetary and banking developments, the report said that money supply went up 12.6 per cent to Dh34.1 billion in 2000, leading to an increase in cash deposits by 10.7 per cent to Dh10.3 billion and domestic liquidity by 11.1 per cent to Dh142 billion.

Net foreign assets rose 4.4 per cent to Dh4.1 billion. The UAE population, the report said, had risen by 5.8 per cent to 3.1 million in 2000. Males constituted 67.4 per cent. Shares of Abu Dhabi, Dubai and Sharjah to total population were 38.2, 29.4 and 16.7 per cent respectively. ' The number of workers increased by 60,000 to 1.6 million in 2000. The wholesale, retail and repairing sector was the biggest employer with 321,000, accounting for 19.5 per cent of the total workforce,' the report added.

The UAE Central Bank posted a net profit of Dh1.6 billion for the year 2000, the highest ever achieved since its establishment. Net profits increased to Dh4.7 billion compared to Dh3.4 billion in 1999. Total value of cash in circulation outside the banking system fell to Dh10 billion in 2000 from Dh10.3 billion in 1999. By June 2001 it went down again to Dh9.7 billion due to the growing demand for liquidity by the business sectors. Cash deposits rose from Dh19.9 billion in 1999 to Dh24 billion in 2000 and Dh27.3 billion by June 2001.

Quasi-cash deposits surged to Dh107.5 billion in 2000 from Dh97.1 billion in 1999. Government deposits rose to Dh42.4 billion from Dh39.3 billion and fell to Dh37.4 billion by June 2001. The total assets/liabilities of the Central Bank increased by 3.5 per cent to equal Dh52.89 billion at the end of June 2001, against Dh51.09 billion at the end of March 2001, according to the bank's new statistical bulletin for the quarterly period April to June, 2001. On the assets side, deposits rose by Dh2.83 billion (6.3 per cent) to reach Dh48.07 billion. Similarly, loans and advances increased to Dh725 million from Dh50 million at the end of the previous quarter. Other assets rose by Dh505 million to reach Dh956 million. Fixed assets decreased by Dh3 million to reach Dh23 million and securities held to maturity dropped by Dh2.20 billion to reach Dh2.57 billion, the bulletin said.

On the liabilities side, the value of certificates of deposits rose by 5.7 per cent to reach Dh18.94 billion. Current accounts and deposits rose by 2.3 per cent to touch Dh11.04 billion. Monetary deposits increased by 6.4 per cent to reach Dh27.32 billion. The total foreign assets of the banking sector rose during the second quarter of 2001 by Dh8.21 billion to reach Dh150.33 billion. Meanwhile, the total foreign liabilities of the banking sector decreased during the quarter under review by 2.8 per cent to Dh26.2 billion.

The aggregated balance sheet of banks rose by 2.3 per cent during the second quarter of 2001, touching Dh285.59 billion against Dh279.22 billion at the end of the first quarter of 2001. On the assets side, cash and deposits with the Central Bank rose by six per cent to Dh29.03 billion. Foreign assets rose by 8.4 per cent to Dh97.97 billion, according to the report. The growth of e-banking in the UAE is faster than that of the U.S., according to Pyramid, a division of the (UK) Economist Intelligence Unit. It found that while the UAE's e-banking adoption rate is 21 per cent, that of the U.S. is 17 per cent. Emirates Bank International and National Bank of Abu Dhabi offer online services, and many others are said to be about to do so.

According to Pyramid, adoption rates in Bahrain and Kuwait, at 17 and 29 per cent, also match or exceed that of the U.S. However, less than 20 among the region's 100 large banks have offered online facilities. The study predicts that as many as 25 million Arabs will go online within the next five years. If this happens, one among every 12 people in the Arab world will be online by then.

The UAE retained its top country credit ranking in the Middle East while improving its rating, even as the world at large was deemed to have become a riskier place. At the global level, it maintained its 26th place. The UAE also charted the eighth-biggest upward move among 145 countries, the Institutional Investor said in its 2001 country credit ratings, carried in its September issue. The UAE's credit rating of 68.3 increased 0.7 points in the six months preceding September and by 2 points for the full year. The global average stands at 41.5, down 0.8 in the six months, and by 1.9 over the past year.

The Middle East average stands at 5.9 (-0.5 in the six months and -1.8 for the year). Interestingly, the U.S., which is placed on the sixth rung at the global level, saw its credit being eroded by 1.1 points to 91.6 in the six months. The UAE led Kuwait at 31st rung globally and second in the Middle East with 63.6 points, down 0.8 points over the year. The report added that among oil producers, despite high-energy prices, only the UAE and Qatar rose, while Bahrain, Kuwait, Oman and Saudi Arabia charted declines. 'The UAE has a system that is more open that those of other countries in the region,' it quoted an analyst as saying, according to the report.

On emiratisation in the banking sector, efforts continue to recruit more nationals in the sector. About 2,600 UAE nationals are working in the banking sector in the first six months of 2001, compared to 2,473 nationals in the corresponding period last year. Ahmed Humaid Al Tayer, Minister of Communications and Chairman of the Human Resources Development Committee in the banking sector, said emiratisation in banks had reached 18 per cent this year compared to 17 per cent last year. The number of national branch directors touched 103, which is around 32 per cent of the total branch managers of the national and foreign banks operating in the UAE, he added. (The Emirates News Agency, WAM)


22 May 2017 Anti-Dumping Law protects nation's industry sector, says Minister of Economy
25 June 2016 UAE economy can absorb 'Brexit shock'
25 April 2016 Mohammed bin Rashid issues Law on Dubai Economic Security Centre
10 April 2016 Dubai in top-5 ‘global cities that matter’
04 April 2016 Economy Minister: Tourism sector constitutes one of the important tributaries of national income

Most Read