From its strategic location at global crossroads and strong financial reserves and sovereign wealth funds to investment in major development and infrastructure projects, the UAE has been able to create a modern, dynamic and diverse economy in only 50 years.
The UAE, for instance, ranked first regionally and 9th globally in the Global Competitiveness Report 2021 issued by the Global Competitiveness Centre, and ranked first globally in 22 indicators. In a staggeringly short time, it has managed to redefine the limits of the possible.
One of the key pillars of the UAE’s ambitions is to attract FDI in key sectors, particularly those associated with the knowledge economy and advanced technologies. Artificial intelligence, the Internet of Things, Blockchain, innovative medical technologies, high-speed transportation, augmented virtual reality, robotics, self-driving cars and renewable energy are all fields in which the UAE wants to excel in the immediate term.
Despite the UN’s figures that global foreign direct investment flows decreased by 42 percent in 2020 over COVID-19, the UAE has seen 44 percent growth in inward FDI flows in 2020, compared to 2019, to reach AED73 billion. The UAE ranked first in the Arab world and 15th globally in terms of its ability to attract foreign direct investment, according to the results of the Global Foreign Direct Investment Report for the year 2021 issued by the United Nations Conference on Trade and Development.
It attracted FDI of US$19.9 billion in 2020, a growth of 11.24 percent over 2019, despite the pandemic.
The UAE also ranked first in the West Asia region, receiving 54.4 percent of the total FDI inflows, amounting to US$36.5 billion, and first in the MENA region, receiving 40.2 percent of the total FDI inflows, amounting to US$49.4 billion.
The forecast is healthy, with the flexibility and attractiveness of the UAE’s business environment, and the constant update of provisions and procedures to meet global standards, keeping the capital inflows coming.
Another sign of the positive investment climate is the UAE’s GDP, which totaled US$421 billion in 2020, despite the global pandemic. Per capita GDP rose to US$43,100, exceeding that of countries such as the UK, Spain, New Zealand and France.
Solid economy despite adversities The UAE’s ability to recover from the pandemic owes much to the prompt, nationwide action taken in March 2020, and the efficacy of sanitation, lockdown and social distancing measures deployed in the weeks and months that followed. In economic terms, the Central Bank’s comprehensive support was equally crucial, contributing some AED100 billion and a range of support packages to the economy. As a result, the UAE ranked first in the Arab world and second globally in the ‘Resilience to Epidemics 2021’ index, issued by the Consumer Choice Centre to rate nations’ response to the onset of COVID-19.
The UAE Central Bank now estimates that positive growth rates for the national economy will be restored by the end of 2021, with estimates of up to 2.5 percent growth in real GDP, and 3.6 percent growth in real non-oil GDP. In 2022, this will reach 3.5 percent growth in real GDP, and 3.9 percent growth in real non-oil GDP.
The government is working with all stakeholders to double the national economy over the next 10 years to reach AED3 trillion by 2031.
An ideal industrial base The UAE has undergone continuous transformation to create the ideal platform for economic success in a rapidly evolving world. In recent years, this has included investment in its digital infrastructure, which ranks first in the Arab world, and legislative changes to create the most competitive regulatory and procedural umbrella.
The UAE has also become a global and regional headquarters for more than a quarter of the world’s 500 largest companies. It remains a primary investment destination for foreign capital, where the country’s major projects in tourism, industry, transport and renewable energy projects are principal targets. Today, the UAE is one of the most advanced countries in the world in creating a regulatory environment that protects the investor and supports commercial activity, providing a flexible and competitive legislative and procedural umbrella that helps stimulate foreign investment and ensures business stability.
Free zones contribute greatly to this environment, and the UAE is home to more than 28 business and logistical zones with global competitive capabilities.
The total trade of goods for free zones rose to AED658.9 billion in 2019, an 11 percent increase on the previous year. The value of imports from free zones amounted to AED340.6 billion in 2019 while free zone exports rose to AED41.1 billion and re-exports totalled AED277.1 billion.
The UAE is, in many ways, a nation built on trade, and its logistics infrastructure directly connects it to more than 250 cities around the world. Its shipping lanes offer routes to more than 400 cities, and its land, sea and air transport system is the most efficient and the most geographically broad in the region.
It boasts 10 commercial airports, 27 airline licenses, 105 shipping companies, 12 sea and commercial ports, and about 310 marine berths, besides the oil ports, with a handling capacity of more than 17 million tonnes annually, and with a tonnage amounting to 80 million tonnes of cargo.
In conjunction, the UAE’s industrial sector enjoys an exceptional support system, helped by economic stability, its strategic location and strong and continuous government investment. The country is also rich in traditional and renewable sources of energy, such as minerals, gas and raw materials important for the nation’s industries.
The UAE is also deeply invested in the energy sources of the future, with renewable energy a top priority. There are many pioneering efforts to adopt the latest innovations that confront the impact of climate change and mitigate global warming. The Emirates Energy Strategy 2050 targets a mix of renewable and clean energy sources to ensure a balance between economic needs and environmental goals. The country will invest AED600 billion until 2050 to ensure that the demand for energy and sustainable growth in the country’s economy is met.
