Economic studies
United Arab Emirates

United Arab Emirates

Population 9.9 million
GDP per capita 35,384 US$
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major macro economic indicators

  2015 2016 2017(f) 2018(f)
GDP growth (%) 3.8 2.7 2.0 3.8
Inflation (yearly average, %) 4.1 1.8 2.8 3.7
Budget balance (% GDP) -3.4 -4.1 -3.7 -2.2
Current account balance (% GDP) 4.7 2.4 2.1 2.1
Public debt (% GDP)* 18.7 20.7 20.7 20.8


*General government gross debt (f): forecast





  • Political stability
  • Diversified and business-friendly economy
  • Liberal trade regime
  • Financial hub position for the region
  • Strong financial buffers


  • Limited flexibility of the monetary policy due to the currency peg regime
  • Lack of transparency of the quasi-public entities
  • High import reliance of the industry
  • Still dependent on hydrocarbon revenues in terms of fiscal performance


Improved growth perspectives for 2018

The UAE economy remains one of the most diversified economies in the Gulf Cooperation Council (GCC) region. This diversity has made it an outperformer in the region, and has prevented its economy from falling into recession in the current era of lower energy prices (since 2014). The UAE will also benefit from big international events, such as the Dubai Expo 2020 and the Qatar 2022 World Cup, as they will increase tourism in the region. Further increases of oil prices, coupled with easier fiscal consolidation, are set to help the economy register higher growth rates in 2018.

In Dubai, investments related to Expo 2020 – which is expected to attract more than 25 million visitors from 180 countries – play an important role in the development of the tourism, hospitality, real estate, construction, transportation, and infrastructure sectors. Business confidence figures indicate that operating conditions in the non-hydrocarbon sector continue to improve as well. Government-supported construction activities are also set to contribute to investments, which will likely inch up over the coming quarters.

Private consumption will likely remain among the main growth drivers in 2018, sustained by household consumption and higher international tourism. The introduction of a VAT in 2018 is not expected to represent a significant drag on growth. However, subdued oil prices will likely prevent the economy from recording growth rates as high as pre-2014 levels. The UAE is affected by production cuts as agreed with OPEC and non-OPEC countries. In particular, Abu Dhabi’s economy – which relies on the hydrocarbon sector for around half of its GDP – has been affected by the output cap. As of September 2017, the UAE’s oil production has declined by 2.5%, compared with its level in 2016. A slower hydrocarbon sector impacts the whole economy – not only through production, but also through government expenditure and investors’ sentiment. Meanwhile, non-oil sectors look more positive: recent recovery in oil prices has led to some recovery in consumer and business sentiment, driving non-hydrocarbon investments.


Fiscal improvement in the horizon

Lower oil revenues have weakened the UAE’s fiscal and external positions. The government has therefore introduced certain fiscal tightening measures, such as removing fuel subsidies, raising electricity and water tariffs, and postponing transfers to government-related entities (GREs). Via these measures, the government has tried to maintain fiscal sustainability, despite persistently low oil prices. Indeed, the government has been seeking to remain committed to its 2021 Vision, which includes a set of national indicators in education, healthcare, economy, government services, security, etc. With solid financial buffers, authorities are able to use withdrawals from these funds to finance the budget deficit. As of August 2017, the UAE’s central bank had AED 335.4 billion dirhams (Emirati dirham; USD 90.6 billion) as net international reserves. The Abu Dhabi Investment Authority (ADIA) is believed to have USD 828 billion as of June 2017.

With the slow recovery in oil prices since early 2017, the budget deficit will start to narrow. This is set to result in higher spending on infrastructure, construction, and investment, as the government should ease fiscal consolidation to sustain economic activity. The budget is expected to be balanced in 2021 and start to produce small surpluses afterwards. The government also uses external borrowing through bond issuance in international financial markets. Higher non-oil exports, thanks to rising global trade volume and tourism revenues, will help to sustain the current account surplus as well. The appreciation of the US dollar on the US Federal Reserve rate hikes would also help the dirham to appreciate, as it is pegged to the US dollar. This may affect the competitiveness of non-oil exports.


Political stability

The UAE stands apart from the region’s instability and is considered as a “safe haven” for investments. The country participated in the Qatar boycott, which began in June 2017. The longer the crisis continues, the more investment appetite and bilateral trade flows will be affected negatively in the region. On the other hand, in the short term, the country will benefit from arrivals of GCC tourists who would normally visit Qatar, but will now visit the UAE instead. The country should remain attractive for investors thanks to its political stability.


Last update: January 2018


The most common methods of payment in the United Arab Emirates (UAE) are cash, credit and debit cards, Open Accounts, Letters of Credit, Documentary Collections, and cheques. Cheques are the most common and preferred method of payment in the United Arab Emirates (UAE), especially in commercial transactions, as there are no costs involved with issuing cheques, unlike transactions that are backed by a Letter of Credit or any other type of a bank guarantee. Cheques constitute a reliable debt recognition title that may be enforced directly before a judge. In addition, UAE criminal law states that a person who delivers a cheque in bad faith without sufficient consideration may be imprisoned.

UAE banks are part of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is used when transferring money between banks, particularly for international wire transfers.



Debt collection begins with the amicable approach, during which the debtor receives a notice for payment, followed by a phone call from the creditor or an agency, with the goal of reaching a payment agreement.



The UAE Courts are comprised of:

· The Court of First Instance

· The Court of Appeals

· The Abu Dhabi Supreme Court

Located in each Emirate, courts of first instance have general jurisdiction and include a Civil Court, a Criminal Court and a Shariah Court. Following a judgement from one of these courts, the concerned parties have the right to appeal to the Court of Appeals on factual and/or legal grounds. Following this, aggrieved parties have the right to appeal to the Supreme Court on matters of law only. Shariah Court handles civil matters between Muslims.


Fast-track proceedings

An order of payment is a procedure where a party applies to the courts for summary judgment against a defendant for commercial debts, substantiated by a valid but unpaid commercial instrument such as a bill of exchange, promissory note or cheque. If a defence is filed, the dispute must be solved via an ordinary lawsuit before the court of first instance.


Ordinary proceedings

Proceedings start by filing a plaint (complaint) in the relevant court. It must meet procedural requirements, and include both the debtor’s information and the details of the debt. The court issues a summons to be served to the defendant, which includes an endorsed hearing date.

Once an answer has been filed by the debtor, the trial process is adjourned to allow the creditor to respond. Further adjournments are given so that memoranda can be submitted by both parties. Once the court believes that the case has been sufficiently pleaded, it reserves the matter for judgment. The entire proceeding is based on written submission supported by documentary evidence. The court will issue remedies in the form of specific actions and compensatory damages. Injunctive relief is not generally available and attachment orders are difficult to obtain.


A court judgment becomes enforceable once it is finalised. If the debtor fails to comply with the court’s decision, the creditor may request enforcement mechanisms before the judge, such as an attachment order, or even the imprisonment of the debtor.

Any foreign awards must first be recognized as a domestic judgment. When bilateral or multilateral reciprocal recognition and enforcement treaties exist, this requirement is simply a formality. In the absence of such agreements, an exequatur procedure is provided by domestic private international law.


On the 4th September 2016, the final draft of the Federal Law on Bankruptcy was approved. The new insolvency law proposes three new insolvency procedures:



An out of court, private conciliation process that is applicable to entities who have not yet formally entered the zone of insolvency, which has the aim of achieving a consensual, private settlement between parties. An independent mediator with bankruptcy expertise is appointed by the commission for a period of up to four months to oversee discussions between the debtor and its creditors.



A debtor that is (a) experiencing financial difficulties, but is not yet insolvent; or (b) has been in a state of over-indebtedness or cessation of payments for less than 45 days, proposes a compromise with its creditors outside of formal bankruptcy proceedings. The PCP includes a moratorium on creditor action (including enforcement of secured claims) and places the debtor under the control of an office holder appointed from the Commission’s (the government agency that has the authority to oversee the insolvency proceedings) roll of experts, for an initial observation period of up to three months.

Other key tools of the PCP process include the ability to raise debtor-in-possession (DIP)-style priority funding, which may be secured on unsecured assets or take priority over existing security, and ipso facto previsions that prevent the invocation of insolvency-linked contractual termination provisions – provided the debtor performs its executor obligations. The debtor is given time to file a plan, which is then voted on by creditors.



The procedure is split into two elements:

i. a rescue process within formal bankruptcy proceedings, which is procedurally similar to the PCP (including an automatic moratorium and the ability to raise DIP funding)

ii. a formal liquidation procedure

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