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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2005
ABU DHABI SECURITIES MARKET
ECONOMIC AND POLITICAL DEVELOPMENTS
Economic and Political Environment:
Its most affluent and powerful emirate, Abu
Dhabi, largely directs the development and
diversification of prosperous United Arab
Emirates (UAE), one of the more diversified
and open market economies of the Middle
East. Enormous hydrocarbon reserves,
including almost 10% of known global oil
deposits (97.8 billion barrels in 2004), and
the world's fifth largest gas reserves
(212 trillion cubic feet in 2004), following
Russia, Iran, Qatar and Saudi Arabia), are
the basis of the federation's wealth. However
one emirate, Abu Dhabi, possesses nearly
95% of all hydrocarbon deposits with Dubai
and Sharjah holding the majority of the
remainder. While continual federal budget
deficits might retard major development
projects in other nations, the estimated
US$ 350 billion foreign asset position of
Abu Dhabi's provides a large, independent
income stream equivalent to approximately
60% of the federation's annual GDP.
Having experienced the adverse impact of
low oil prices on a number of occasions,
most recently in 1998, the UAE is
aggressively diversifying the economy into
trade, tourism, and heavily subsidized
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agriculture and high technology industries.
The federal government has invested heavily
in aluminum production, tourism, aviation, reexport
commerce, and telecommunications
and the non-oil components of the economy
in 2003 accounted for more than two-thirds
of GDP and in excess of 30% of exports.
Government emphasis on education,
modern technological infrastructure, a
business-friendly climate, and comparatively
more freedom than other Gulf States has
maintained the Emirates' status as one of the
most dynamic economies in the region.
Economic Performance:
Due to high oil prices, GDP grew 7% in 2003,
up from only 1.9% in 2002, when oil prices
were depressed. In a testament to the
strength of the UAE diversification program,
non-oil GDP grew a whopping 5%, due to a
number of projects in construction, upstream
gas, and downstream oil services. Inflation,
as measured by the consumer price index
(CPI) increased slightly to 2.8% from 2.3%
due to higher oil prices. The fiscal balance
recorded a large surplus of 13.7% in 2003,
up from 10.8% in 2002.
Key Information Contacts
Abu Dhabi Chamber of Commerce and Industry www.abudhabichamber.ae
Central Bank of UAE www.uaecb.gov.ae
Ministry of Finance and Industry www.uae.gov.ae/mofi/
Ministry of Planning www.uae.gov.ae/mop
Ministry of Economy and Commerce www.uae.gov.ae/moec
UAE GDP, CPI AND INVESTMENT
(Annual Change in %)
Structural reforms are moving along at a
rapid clip. Dubai extended foreign ownership
of land and properties to certain real estate
developments and also launched several
new duty free zones. Abu Dhabi is moving
ahead to privatize its water and electricity
sectors by 2006.
The current account balance has been in
constant surplus in recent years and
continuing strength in the oil prices should
keep the current account in healthy surplus
for years to come. In 2003, this surplus
reached US$ 12.1 billion, or about 15.1% of
GDP. Trade has played a major role in the
UAE's economic growth and the free trade
zones of Dubai and Sharjah have been large
contributors. Both the trade balance and
current account have registered healthy
surpluses throughout the 1990s. 1
1 Economic and Political Overview, County Watch
Incorporated, 2005
1999 2000 2001 2002 2003
Real GDP (at factor cost) 4.4 12.3 3.5 1.9 7
Hydrocarbon -4.5 13.1 1.7 -8.1 13.8
Nonhydrocarbon 7.5 12 4 5 5.2
Consumer price index 2.1 1.4 2.8 3.1 2.8
Investment (in percent of GDP) 27.8 23.3 24.7 24.1 22.4
* IMF 2004 Article IV Consultation with UAE