Economic Analysis
United Arab Emirates

United Arab Emirates

Population 9.5 million
GDP per capita 38649 US$
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major macro economic indicators

   2014 2015 2016(f) 2017(f)
GDP growth (%) 3.1 3.8 2.7 2.6
Inflation (yearly average) (%)  2.3 4.1 3.5 3.1
Budget balance (% GDP) 4.9 -2.1 -3.9 -1.9
Current account balance (% GDP) 10.0 3.3 1.1 3.2
Public debt (% GDP) 15.6 18.1 18.9 18.8


(f) Forecast





  • Among the most diversified economies in the Middle East
  • Importance of Abu Dhabi, which holds about 90% of AEU's substantial hydrocarbon reserves
  • Dubai's growing importance in services (regional business centre, world's seventh largest port)
  • Important financial base thanks to the Abu Dhabi sovereign fund
  • Political stability of the Federation


  • Diverse economies, still dependent on Abu Dhabi's hydrocarbon revenues
  • High external debt of Dubai's quasi-public entities
  • Quasi-public entities lack transparency
  • Problem of demographic balance, due to size of the foreign population


Slowdown in activity in 2016 and slight recovery in 2017

UAE economy remains more diversified than that of the other GCC countries and has shown some resilience in the face of lower hydrocarbon prices. The slowdown in oil production and the decline in public spending had repercussions on the non-oil economy. Abu Dhabi, which remains the most dependent Emirate on hydrocarbon sector (49% of GDP), should experience a more marked slowdown in 2017, following the cuts in capital spending and less transfers to quasi-public sector companies. Dubai should be more resilient, even though non-oil activity will show signs of a loss of momentum. At the Federation’s level, financial and tourism sectors will continue to drive growth. In contrast, construction will continue to experience difficulties. Distribution and trade will also suffer from less dynamic consumption. Investment will slow in response to the fall in public procurement, which will have an impact on credit growth. Exports will continue to be hampered by  the dollar appreciation, to which the dirham is pegged, and the hike in US interest rates should reinforce this trend. The slight rise in oil prices could, however, temper this soft economic environment and give a slight impetus to activity.  Inflation will remain contained in 2017, as the effect of removing subsidies will have been absorbed. The fall in property prices could also put pressure on overall price levels.  


Improvement in the public deficit and the current account surplus

The public deficit widened significantly in 2016, but is still smaller than that observed in the other GCC countries. The fall in hydrocarbon prices from an average of USD 52.2 in 2015 to USD 44 in 2016 affected the Federation's budgetary income. In 2017, the public deficit will be lower, as the expected modest recovery in oil prices is projected to take the pressure off the public finances. Non-oil revenues will develop only weakly compared to 2016, following the adjustments to taxes and royalties aimed primarily at expatriates. Spending is expected to remain unchanged compared with 2016, with a forecast budget of USD 13bn, whose main items will be the development of the energy and water sectors, and the Sheikh Zayed housing programme. Moreover, a plan covering the period 2017-2021 is designed to rationalise and prioritise public spending over five years. This plan will place more focus on education and health spending and aim to limit the pressure on public infrastructure caused by rapid population growth. The appearance of a public deficit from 2015 initially constrained the governments of the Emirates to draw on their financial reserves and subsequently to issue debt on the international markets, like the USD 5 billion bond issued by Abu Dhabi in May 2016.  The amount of debt at the Federation level will remain sustainable, provided the seven Emirates apply the principle of budgetary solidarity, but the amount of quasi-public debt remains concerning for Dubai. Indeed, the Gre’s debt represent 70% of Dubai GDP against 27% for Abu Dhabi. Despite the downturn in public deposits, the banking sector remains liquid. The Emirates' banks are profitable and well capitalised.

Reliant on oil exports, the external accounts are expected to recover in 2017, having been constrained by the slowdown in exports in 2016. An appreciation of the dollar following the hike in US interest rates could however limit the competitiveness of exports, especially of non-oil exports.  The attractiveness of the property sector could also suffer, thus limiting its attractiveness for foreign investors. The central banks' reserves will continue to be maintained at a high level. These totalled USD 81bn in October 2016.


Away from the tensions of the Arab world

The United Arab Emirates stands out for the stability of its political and security situation in the region. However, the Federation plays a regional role, particularly within the coalition in Yemen and Syria. The business climate, considered as one of the most favourable in the area, is on an improving trend, thanks to the expected passing of the new insolvency law, which should provide a framework for the process for the winding up and restructuring of companies in difficulty. Conversely, the "emirisation" programme for jobs, under which recruitment is based on nationality, could be an obstacle to foreign investment.


Last update: January 2017


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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