WHAT A YEAR UAE

UAE 2018 | DIPLOMACY | YEAR IN REVIEW

Each of the seven Emirates, in the country's quest to diversify its economy away from oil and gas, have sought to bring something unique to the table—and there are signs it is working.

The UAE's economy is set to grow by between 3.5 and 4% in 2017, according to UAE Ministry of Economy estimates. This would follow 3.7% growth in 2016.

UAE Central Bank data anticipates that non-oil growth will out pace oil-sector growth by 2.1 percentage points over the year, which is good news for a country that hopes to increase the contribution of the non-oil sector of the economy from 70% today to 80% within the next 15 years. The authorities also celebrated recently as The World Bank moved the UAE up eight notches to 26th in its latest Doing Business report. This puts the country ahead of every other Arab nation. On top of that, the UAE proudly ranked 19th in the Global Entrepreneurship Index Report 2016, topping all other MENA countries.
The Emirate of Abu Dhabi serves as the capital of the UAE and represents 87% of the territory of the country. The western region of Abu Dhabi, known as Al Gharbia, represents 83% of the Emirate and is from where the capital draws much of its wealth—approximately 90% of Abu Dhabi's oil wealth is located in this area. In the wake of falling global oil prices, the government in Abu Dhabi worked to rein in spending and introduce a VAT to diversify revenues. With this, Standard & Poor's is predicting a budget surplus of 4.5% between 2018 and 2020 and rating sovereign debt at AA/A-1 with a stable outlook, noting that the Emirate has a robust fiscal position, large currency reserves, and an estimated GDP per capita of USD75,000 in 2017.
Down the road in Dubai, the engines of growth are starkly contrasting. Lacking the oil of its larger neighbor, Dubai relies more heavily on the non-oil sector, its real estate and construction market often propping up non-oil growth nationwide—indeed, the non-oil sector is touted to represent 80% of GDP within 15 years. Dubai's economy grew 2.7% in 2016 and is expected to grow 3.1% in 2017. The country's sophisticated network of ports—Jebel Ali Port and Port Rashid being the most significant—and wide variety of free zones—Jebel Ali Free Zone, Dubai Healthcare City, and Dubai Media City to name just a few—have ensured it is the UAE's top destination for foreign investment. In 2016, FDI amounted to AED25.5 billion, maintaining Dubai's ranking in seventh place among the top-10 global recipients. Dubai is also set to host Expo 2020, a boon not just for the Emirate but the entire UAE. Spending on infrastructure for the event alone could reach AED25 billion, while some predict the slow-burn economic benefit could be a AED140 billion contribution to GDP.
The Northern Emirates are no less significant in their contribution to the UAE's mission. Sharjah, the third-largest Emirate, represents one-third of the UAE's manufacturing sector and is the self-styled cultural capital of the UAE, chosen as the Islamic Culture Capital of the Arab Region for 2014. The Emirate hopes to attract over 10 million tourists by 2021, the year of the culmination of the UAE's own Vision 2021, a broad-ranging blueprint for sustainable growth. Ras Al Khaimah has also developed a solid industrial matrix and is home to RAK Ceramics, one of the world's largest ceramics producers. The company boasts a global workforce of around 15,000, 8,500 of whom live in Ras Al Khaimah. Ajman boasts of having retained a unique Emirati touch and has grand ambitions of its own. Growth in the Emirate is driven by the Ajman Free Zone (AFZ), while the most significant project at present is the construction of Ajman International Airport. As the UAE's eighth international airport, the project is expected to add much-needed capacity to the Northern Emirates.

The Emirate of Fujairah stands out as the only Emirate that has a coastline on the Gulf of Oman. The Port of Fujairah has come to prominence, located on a key global energy trade route. In late 2016, the port authorities launched the UAE's first very large crude carrier (VLCC) jetty on the Indian Ocean, a AED650-million investment that the Emirate hopes will boost its influence as an oil-trading hub. Umm Al Quwain has a tiny population of 50,000. It is, however, a key cog in the UAE's food chain, as the site of the UAE's first poultry farm and a crucial supplier of poultry and dairy products to the local market. The main growth engines, however, are the Ahmed Bin Rashid Port, within which is Ahmed Bin Rashid Free Zone and Umm Al Quwain Free Trade Zone (UAQ FTZ). The largest current development is the transformation of Sinniyah Island, close to the city of Umm Al Quwain, into a tourist haven, with Sobha Group currently working on a AED25-billion development of hotels, villas, and more. A testament to what cooperation can achieve, the UAE, while built on oil, is carving a future for itself beyond the black stuff. With the country maintaining high hopes for the future, investors ought keep a close eye on developments across the Emirates if they are to understand what really makes the UAE tick.