The government of the United Arab Emirates (UAE) has recently announced that it will release its plans for the country’s ‘post-oil economy’ in the next few weeks.
Figures from the UAE Embassy in Washington D.C. suggest that the Emirates possesses 10% of the world’s proven crude oil reserves. Therefore, throughout the past few decades the country’s government has taken advantage of the UAE’s oil supply to fuel robust economic growth.
Data quoted by Arabian Business, a Middle East online news agency, show that the UAE’s gross domestic product (GDP) hit AED555 billion in 1980. Oil accounted for the majority of the Emirates’ GDP, at 79%. However, in recent years the country has started developing its non-oil economy. The nation’s GDP reached AED1,155 billion in 2014; 31% came from oil revenue but 69% came from the UAE’s rapidly growing non-oil sector.
According to Arabian Business, the UAE’s government will publish the details of its plan to further diversify its non-oil sector in the coming weeks. This will focus on investing in the UAE’s human capital and the strategy will detail how the Emirates will improve productivity in the workplace and make itself more competitive in the international marketplace.
These plans were announced after a ministerial retreat day, where senior government officials discussed the challenges of developing the UAE’s ‘post-oil’ economy. Commenting on the news Sheikh Mohammed, the vice President and Prime Minister of the UAE, said: “Investing in human capital is the global approach in the 21st century, and the only means to achieve sustainable development that drives our country towards greater progress and prosperity.”
Tweeting later, Sheikh Mohammed continued: “Today we concluded the UAE post-oil retreat. Our new strategic approaches have become clear and the initiatives will be announced during the coming weeks. We would like to reaffirm to our citizens that the UAE is in safe hands and that the future of the nation will move forward based on a wise vision. God willing, the best is yet to come.”
Moving with the times
Global oil prices have been falling consistently for more than a year. According to The Week, an online news agency, global oil prices have fallen from over $100 per barrel in summer 2014 to a 13-year low of $27 per barrel in January 2016. Therefore, it’s become more important than ever for the UAE to reduce its dependence on oil.
In October 2015, UAE Minister of Economy Sultan Bin Saeed Al Mansouri announced: “We want to increase the contribution of [the UAE’s] non-oil sector to 80% [of GDP], from the present figures of 70%, in the next 10 – 15 years. Our target is to reduce the contribution of oil sector to just 20% of the overall GDP.” With this announcement, we have learned that the Emirates will focus on utilising human capital to insulate itself from falling global oil prices and bolster its economy.
About Abdulrahman Al Ansari
Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.