The Annual Economic Report 2015

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Course:12th November 2016
The United Arabs Emirates 2015 Economic Report
Executive Summary
The United Arab Emirate is an economic region globally recognize for oil and gas production in large quantities. The mission statement has been the overall guideline in operation whereby the Block has strived at ensuring competitiveness and diversified economic activities. The economic region has proven its mission through its strategies in achieving a better economy from the recent crisis. The political stability has enhanced better governance in ensuring sustainable development despite the economic challenges and environmental variables affecting the economic growth of the region. The leadership of Shaikh Khalifah Bin Zayed Al Nahyan has stabilized the government structure through efficient national strategies that involved revolution activities towards achieving Vision 2021 (“the United Arab Emirates” 01). The Study further elaborates on several finding and provides a comprehensive analysis of these variables responsible for setting a stable economy. For the past few years, the block has experienced an economic recession due to the fall in oil prices. It has shifted the economic dependence in the oil and gas industry to other potential sectors that contribute to economic development.
The leadership of the block has gone through trajectory reforms to fit the situation and maintain its financial recognition in the world. The study further elaborates on the contemporary economic issue and the new problem at the course of this crisis.

Thus, this introduces other variables such as innovation, technological communication, and educational facilities. Consequently, the emerging issues illustrate the continuous effort in settling this situation. In conclusion, the Arab Emirates effort in diversification has been successfully implemented through several strategies despite other challenges in the process. Therefore, further focus on the infrastructure will appropriate resource evenly within the block and reduce the rate of unemployment due to the attraction of foreigners in the region. Better economy knowledge recommendation from the study, therefore, includes the dynamic innovation and research to ensure efficiency in demand and supply of products.
Introduction
Background of the Context
The United Arabs Emirates is an economic block that has firmly proven its growth rate through the Balance of trade over past few years. The Emirates is ranked the seventh block with efficient labor market with well-established economic activities. The ranking reflects vital infrastructure and stable environment for investment that support investors. The official language in the region being Arab and one religion of Islamic has created a general economic agreement without dispute in trade activities. The UAE has an approximate population of 9 million people whereby 7.8 million of the people are the expatriates, and 1.2 million of the people are citizens of Emirates. The block has a series of challenges in maintaining the economic activities and the Gross Domestic Product of the countries in the region. The International Monetary Fund (IMF) report of UAE on the global economies illustrates a positive growth for the past five fiscal years. Consequently, a steady growth and improvement have posed an economic index of 5.1% in 2014 and 5.4% for 2015. The 2013 GDP index of 4.7% shows a greater influence in the economy in the present year indicating that the block has higher exports of more excellent value than imports (“the United Arab Emirates” 14). The economic booster in the block being oil and natural gas reserves is rated the seventh largest producer of petroleum products. The revenue in the oil and gas products has been used to establish the overall development of the country. Thus government income has been used to develop health care facilities, infrastructure, and the education sector.
Scope of the Study
The fundamental objective of the report is to analyze the economic index and the financial contributors of the Gross Domestic Product during the year 2015. Further evaluations will examine the previous years and scrutinize the overall economy of the Block. Besides, the report set to evaluate the findings from the study and provide a recommendation on the study.
Findings of the Study
The economic outcome of the fiscal year 2015 has an extensive and comprehensive study of the variables that contribute to the economy. The study further elaborates on financial contributors and the National Strategies used in achieving a stable economy:
Economic Analysis
Since 2008, the world economic development has become unpredictable across all continents; however, the UAE indicated a steady economy despite the situation. The constant demand for oil and gas across the world has promoted the UAE Gross Domestic Product building the economic index for a series of years. The fiscal year 2015 has been unusual in the block with the oil gas prices dropping massively. The leadership of the UAE under President Shaikh Khalifah Bin Zayed Al Nahyan has focused extensively on diversity to reduce the dependence on oil and gas products. The government of UAE has established vision 2021 strategies as a national agenda in diversifying the economy. In June 2014, the oil industry sharply fell losing approximately 60% of oil production revenue. The estimated price of oil in 2015 has been estimated to be $55 a barrel. This price index has dropped from the usual economic expectation affecting the overall growth of the region. Initially, oil export in the block has been estimated to be 78% GDP for the Arab States. These clearly indicate a drastic fall of GDP by approximately 18% in the economy. However, the political stability of the block has transformed the situation during the past fiscal year with a series of reforms in the economic activities. Moreover, the block has implemented strategies to support another sector to allow economic improvement and balance of trade. The outcome of this situation has positively contributed to the GDP in 2014 with revenue of 2853 billion dollars indicating an increment of 119 dollars income from 2013. The diversification of the economy has also increased the per capita from $ 8200 in 2013 to $8400 in 2014 due to the significant disparity in economic activities. The national economy in 2015 is approximately 69% from other sectors while 29% comes from the oil industry. The National Bureau of Statistics illustrates that the GDP amounts to 1.46 trillion dirhams in 2014 an increase from the previous year by 45 billion dirhams (“the United Arab Emirates” 15).
Inflation Analysis
The drop in oil prices has led to inflation posing a greater challenge in the block due to the investment of capital in various sectors. The oil industry in UAE has negatively affected other industries such as the food production industries. The consumable products in the country have also declined in prices due to the reduce demand on luxury products by the people. Moreover, the agricultural imports have also fallen in the Arab States. It has further brought to the different inflationary pressure regarding imports and other domestic demands. Besides, a relative inflation has been seen in the real estate sectors among other areas. The overall influence of inflation is the internal development of the country imposing pressure on the supply side hence a greater advantage to the staple commodities. The inflation rate is expected a decline from 5.1% to 4.27% with more expectation of the drop in 2015 to 4.1%. The expansion and diversification are the leading cause of this inflation in the block. According to the Statistical Center of Gulf Cooperation, records that food and beverage in 2015 rose in prices in several parts of the block giving a general inflation (“the United Arab Emirates” 16-17). Other sectors such as electricity and water supply were not left from the crisis contributing heavily to the price hikes. This inflation challenge has gradually reduced the GDP of the Arab States. The diversification of economic dependencies allows the public expenditure to increase hence reducing the federal revenue. These expenses increase the monetary value within the region affecting the GDP initially established. However, in the long run, this will benefit the state regarding infrastructure which will attract foreign investors in the block.
Budget Analysis
The budget development has been a significant instrument in preventing the economic recession in the block. The budget setting in the Arab States has been used to establish the constraints on spending to avoid limitations of the GDP of the block. Decline in oil prices has caused instability of product demand and supply forcing the ministry to establish an explicit budget to guide the block in achieving its vision. Overall analysis indicates that the drop in oil prices reflect negatively in budget constraints. Nevertheless, a surplus in the GDP is experienced to accommodate the demand causing a deficit in the fiscal year 2015. Therefore, the budget is significant in accessing the surplus and Demand of products alongside the balance of trade (“the United Arab Emirates” 17). The 2015 budget has evenly considered all the sectors in the economy whereby government services, infrastructure, business services and manufacturing taking a higher percentage than the minor industry with less returns such as agriculture, quarrying and gas production taking little concern by the government of the UAE. This consideration on the main sectors primarily improves the States’ GDP and balance of trade. Thus, this strategy by the ministry of economy is to settle on the economic crisis on price decline on oil and natural gas. The outside investment has also imposed a greater impact on imports into the country to service the growing demand for commodities.
Unemployment & Financial Market Analysis
The internal situation of the Arab States has another negative implication of unemployment due to the slow implementation of necessary reforms limiting the GDP of the block. The internal labor organization indicates that approximately 11.5% rate of unemployment in the region. A positive impact in the fiscal year 2015 is the financial markets slowly contributing to the economy. The institutional financial market has attracted foreign investors in the country due to the international standards recognition. The Arab Market Authority has listed trade securities with a clear disclosure of companies and corporate governance. The aggregate financial market of 2014 is estimated at 797.3 billion dollars. Besides, the share value has a total volume of 140 billion dollars with a value of 1.04 trillion dollars securities transacted in the year. This positive value has boosted the economy reducing the debt of the GDP (“the United Arab Emirates” 17). The financial market has become a significant instrument and economic power to invest attracting the investors in the country. Moreover, the economic power has significantly contributed to maintaining the currency value of the block. The financial market initiative has joint projects, common markets in the block and monetary policies among another sector in ensuring integrations of the overall economy of all countries. The financial market has also contributed every in the foreign trades indicating a total investment of 1072.4 billion dirhams in 2014 (“the United Arab Emirates” 20). The development of banking industry has been significant in controlling the currency circulation and exchange of foreign currency.
Other Contemporary Economic Variables Analysis
The vision 2021 knowledge economy strategy has been a fundamental pillar to focusing on innovation, education system, and technology. The scientific innovation is a greater factor that allows continuous innovation in the block. Research and development institutions are vital in providing the technological infrastructure that allows advancement in standards of the states towards achieving successful projects in the Arab Emirates. The continuous training to the governmental and non-governmental sector on the new technologies should encourage a culture of willingness to learn new thing from the situation (“the United Arab Emirates” 55-56). Technology is also another significant factor in enhancing the global market of financial markets to the foreign investors. Technological information serves in the dissemination of information in the business sector among other sectors such as health sector, the banking industry, and transport sector. The e-government project and the e-learning also focus on improving education to the people at their flexible zone.
Conclusion & Recommendation
Conclusion
In conclusion, the economic block has comprehensively suffered the economic recessions during the year 2013 to 2015. The situation has also allowed the block focus on other economic variables to settle on the insignificant factors affecting the growth of the region. The national innovation strategy has stimulated the establishment of several industries to that heavily contribute to the economy. The budgetary techniques have incorporated several sectors that have built the economy hence leading to progressive development of ideas on annual basis. The aggressive strategies and projects on important fields are to create future opportunities to the people and reduce unemployment and have a balance of trade out of economic diversification. Nonetheless, the economic variables have an integrated relation in determining the overall economy of the region. Significantly, the Arab States have demonstrated an innovative system of the government towards this crisis. Consequently, the country has achieved its mission statement on diversification of economy dependence.
Recommendation
It is appropriate for the Arab States to focus on balancing diversity and innovation the economy towards achieving its initial GDP and beyond. In this case, the agricultural sector, fisheries, quarrying among another area should have same funding with the major sectors from the government to reduce unemployment and uneven distribution of resources in the region (“the United Arab Emirates” 24). The oil and gas industry should be closed down once the block achieves its GDP to increase demand for oil in the long term strategy. The National Strategies should have productive activities that annually incorporate the possible changes in the environment to ensure a flexible system of governance. Moreover, advance knowledge economy will allow uniformity of standards despite the difference in the economic focus by the seven Emirates. The tracking analysis of the GDP should be a guide a way to make a comparison and accept further enhancement to develop a greater GDP aggregate. The government of the region needs to strategize in laws and regulation to govern foreign investors and to set other regulation in the banking industry to prevent large money circulation in within the people as a form of inflation control mechanism.
 
Work Cited
“The United Arab Emirates: Annual Report Economic Report 2015”. Ministry of Economy. Vol.
23 Ministry of Economy Report, 12 November 2016.