The UAE Economy: A Safe Haven Amidst Turbulence
- 25 August 2015
Over the years, observers, financial institutions and international analysts have put their faith in the UAE’s economic performance. The trust has been gained as a result of the quick recovery made by the UAE since the global financial crisis, its steady progress, its transition towards a vital economic power at regional and global levels, and a driver of global growth. The International Monetary Fund (IMF) recently released a report analyzing the UAE economy’s performance. The report contains several positive messages for the UAE.
Non-oil sectors in the UAE have become capable of driving overall economic growth and making up for the slowdown in oil sector due to the decline in global oil prices. IMF confirmed that the implementation of megaprojects in infrastructure, tourism, construction, financial and monetary sectors, trade, renewable energy and other areas will continue to support the growth of non-oil sectors up to 2020 and increase their share in the economy in the long run. The UAE’s fiscal position is robust thanks to the large fiscal buffer it has accumulated in recent years which have helped limit the negative impact of lower oil prices and volatility in emerging market economies. Owing to this, the IMF described the UAE as a safe haven in a world that has long been facing wide-ranging financial turmoil.
The UAE enjoys high level of monetary stability. Its banking sector operates within a framework of rules and standards that meet Basel 4 requirements and all other standards of global monetary stability. This safe monetary position shows the efforts the UAE’s Central Bank has made since the beginning of the global financial crisis. The Central Bank has been keen to provide all the requirements of monetary and banking stability. It has followed consistent and transparent policies in managing interest and exchange rates and sought to strengthen the banking regulatory and supervisory framework. The IMF says that the Central Bank has been a stabilizing factor for the UAE’s banking sector and the economy.
In order to achieve sustainability for future generations, the UAE’s economic policies – including financial, monetary and commercial policies, natural resources management, human resources and labor market management – maintain balance between quantitative expansion of economic growth and qualitative development. IMF referred to this in its report, emphasizing the importance of the policies adopted by the UAE for decades to support the fundamentals of the economy over medium and long terms, reducing economic weaknesses and observing the requirements of sustainability in growth and development as well as to ensure fairness for subsequent generations.