United Arab Emirates  WT/TPR/S/162 
 Page 1 
 
 
I. ECONOMIC ENVIRONMENT 
(1) MAJOR FEATURES OF THE ECONOMY  
1. The United Arab Emirates (UAE) is a federation of seven emirates located in the Arabian 
Gulf.  Abu Dhabi, Dubai, and Sharjah are the three largest1;  Abu Dhabi City is the federal capital.  
The UAE shares a border with Saudi Arabia and Oman.  It has a land mass of 83,600 square 
kilometres2, and a total population estimated at 4.32 million (Table I.1).  The urban population 
accounts for 75% of inhabitants as four fifths of the territory is desert.  About 80% of the UAE's population is foreign.
3  The UAE has the world's fifth largest proven reserves of crude oil (9% of total 
world reserves), and fourth largest reserves of natural gas (5% of the world total).4  The authorities 
estimate that these reserves will last more th an 100 years at current production rates.   
Table I.1 
The United Arab Emirates at a glance, 1995 and 2004 
 1995 2004 
Population (millio n) 2.40 4.32 
GDP total (billion, at current prices)   
In UAE dirhams 145.3 378.8 
In U.S. dollars 42.7 103.1 
GDP per capita (US$) 17,720 23,722 
Share of GDP at current prices (per cent)   
   Agriculture, livestock and fishery  2.9 2.7 
   Mining 30.9 32.8 
   Manufacturing 10.4 13.1 
   Electricity, water, and gas 1.5 2.0 
   Construction 8.7 7.5 
   Trade  11.7 12.2 
   Transport, storage and communications 6.7 7.2 
   Real estate   10.0 7.8 
   Financial services   5.6 5.9 
   Government services 10.6 8.5 
Source:  Ministry of Information and Culture (2005), United Arab Emirates Yearbook 2005 ;  and IMF Staff Reports, 
 various issues. 
2. Among the Emirates, Abu Dhabi accounts for more th an half of the country's total GDP, close 
to 40% of the population, and over 90% of crude oil and gas producti on.  Dubai is the second largest 
emirate in terms of economic size, and contributes one  quarter of the country's total GDP.  In 2004, 
Dubai welcomed close to 5 million t ourists, and 16 million passengers used its airport.  It has become 
the region's centre for trade, essentially by devel oping its location as a leading transhipment and re-
export centre, based on a long-standing trading history and a generally pro-business stance.   The 
other emirates rely on a mix of trade and light manufacturing, and depend on financial support from 
the Federal Government and the two largest emir ates.  The highly decentralized policy-making 
process appears to induce intense competition among the large emirates (in particular) in terms of 
economic achievement, and may explain that infrastru cture, such as ports, airports, and free zones, 
tends to be replicated across the country. 
                                                      
1 The others are Ajman, Fujairah, Ra's  al Khaimah, and Umm al-Qaiwain.   
2 Ministry of Information and Culture (2005). 
3 National Human Resource Development and Employment Authority (2005).  Major nationalities 
include Arabs, Pakistanis, Indians, Iranians, Afghans, Bangladeshis and Filipinos. 
4 OPEC (2004). WT/TPR/S/162 Trade Policy Review 
Page 2 
 
 
3. The federal economy depends fo r one third of its GDP on petroleum and gas mining (down 
from 74% in 1980), a relatively low share compared with other Gulf countries.  The services sector 
contributes about 55% to GDP, led by external trade – the country is an important transhipment and re-export centre – and by public administration services,  wholesale and retail trade, real estate and 
construction;  this share has not expanded significantly since 1995.  Nevertheless, these main 
subsectors have grown significantly in nominal valu e terms, as the price of oil increased substantially 
from its 1995 level of US$20/barrel.  The manufacturi ng sector is large and dynamic, largely based on 
activities in free zones.  Agriculture contributes 2.9% to the GDP;  this share is high given the quasi-
desert nature of the territory, and is achieved tha nks to important state support since the early 1980s.
5     
4. The total GDP of the UAE is estimated at around US$103 billion (Table I.1). Its growth over 
the last thirty years has allowed the country to ach ieve one of the world's highest per capita incomes, 
at close to US$24,000.  In 2002, the UAE ranked 49th out of 177 countries in terms of the UNDP 
Human Development Indicators.6  This performance was made possible partly by the expansion of the 
hydrocarbon subsector, but mainly by a large and su stained influx of foreign labour that allowed the 
non-oil sector to develop rapidly and competitively (Chart I.1).7  The growth of labour and capital, 
rather than total factor productivity, accounts for most non-oil output expansion over the 1981-2000 
period.8  In turn, this expansion was possible because of the UAE's open foreign labour policy, which 
has enabled the private secto r to recruit expatriate workers at competitive wages. 
5. In recent years, unemployment among UAE nationals has become a political issue as it has 
increased slightly to 2.7%.  Even though this rate is relatively low, it concerns mostly Emiratis 
because foreigners do not generally have access to unemployment status and benefits, and therefore 
are not recorded.  Moreover, close to half the Emirati population is under 15 years old, and a large number of nationals is likely to enter the labour fo rce in the near future.  To create employment 
opportunities for UAE nationals, "emiratization quotas"  and other measures have been put in place at 
federal level (Box I.1).  This quota policy, if wide ly implemented, could become an impediment to 
doing business in the UAE, essentially because of the lack of skilled UAE nationals in some 
professions;  it would further increase the relative a ttractiveness of operating in the free zones, where 
these provisions do not apply. 
6. The attractiveness of the UAE's free zones resu lts partially from competition and investment 
restrictions that prevail in the rest of the econom y.  Although economic policy purports to be liberal 
and business-friendly throughout th e UAE, important restrictions (through exclusive dealership 
arrangements, limitations on foreign ownership in lo cal companies and substantial state involvement 
in selected activities) limit market competition in gene ral, and foreign competition in particular;  these 
restrictions do not apply to the free zones (Chapt ers II(5) and III(3)(v)).  On the export side, UAE 
companies that compete internationally are in most cases government-owned , with access to ample 
finance on favourable terms;  their management is  frequently the same entity as their regulatory 
authorities (e.g. airlines and civil aviation authority, po rts, the Dubai International Financial Centre).   
                                                     
 
5 These statistics must be analysed with caution as there is no comprehensive data collection 
programme on which to base national accounts aggregates. No national household budget survey has ever been 
conducted.  GDP data, compiled both by production and expenditure approaches, are not considered reliable.  
Basic data remain inadequate for manufacturing, construction, wholesale and retail trade, and most other services. The authorities indicate that significant efforts are being made to improve the quality of statistical 
information, including a comprehensive 2005 Households and Establishments Census, a household budget 
survey planned for 2006, and the establishment of a national statistics bureau. 
6 UNDP (2005). 
7 This population growth rate has remained among the world's highest in recent years (5.6%), due to the 
wide gap between birth and mortality rates, high fertility rates, and the persistent inflow of foreign labour.   
8 IMF (2003). United Arab Emirates  WT/TPR/S/162 
 Page 3 
 
 
0.0500.01,000.01,500.02,000.02,500.03,000.03,500.04,000.0
1975 1980 1985 1990 1995 2000 20040.010.020.030.040.050.060.070.080.090.0100.0National population
Foreign population
Real GDP (right hand scale)
Real petroleum exports (right hand scale)Chart I.1
Real GDP and population, 1975-04
Thousand peopleUS$ Billion 
constant prices
Source: World Bank, CD-Rom; OPEC online information; and WTO Secretariat estimates.
 
7. The UAE dirham (Dh) was officially pegged to the Special Drawing Right (SDR) from 
November 1980 to December 2002, though, in practi ce, it was pegged to the U.S. dollar at a fixed 
parity.9  Since then, in line with co mmitments agreed with other G CC countries (Chapter II(4)(ii)(a)), 
including toward the adoption of a common currenc y (currently planned for 2010), the UAE dirham 
has become officially pegged to the U.S. dollar. The mid-point between the official buying and selling 
rates for the dirham has been Dh 3.6725 per US $1 since November 1997.  The UAE's exchange 
system is free of restrictions on payments and transfers for international transactions, except for 
certain restrictions under terrorist financing provi sions that have been taken in accordance with UN 
resolutions.  The UAE accepted the obligations  under Article VIII of the IMF Statutes on 
13 February 1974. 
8. The UAE's external debt (owed by the privat e sector only) is currently 12.5% of GDP 
(US$16 billion), down from over 25% in 2000-01.  Government (domestic) de bt is about 8.5% of 
GDP. 
                                                      
9 IMF (2004).   WT/TPR/S/162 Trade Policy Review 
Page 4 
 
 
Box I.1:  UAE "emiratization" policy 
 
The emiratization policy was introduced in 1998 by the National Human Resource Development and 
Employment Authority (Tanmia).  This policy aims to increase the number of nationals employed in private sector activities.  The targeted sectors were selected ba sed on two principal criteria:  the economic health of 
the industry and its importance to the country; and the availability of skilled jobs where good working 
conditions exist for nationals.   
In 1998, Cabinet Decree No. 10 was introduced requiring all banks, including foreign bank branches, to 
achieve 4% annual increases in their number of UAE staff from 1 January 1999.  According to the authorities, 
banks  have since made noticeable progress in recruitin g UAE nationals, although not as many as required by 
the quota.  In general, about half of the UAE jobseekers registered with Tanmia (foreigners cannot register) 
that subsequently secured jobs in the private sector were recruited by the banking sector. 
In 2001, the Government recommended that 5% of the employees of all insurance companies, including 
foreign companies, should be UAE nationals, and that  the number of nationals employees should increase 
annually by 2%.  This was made mandatory in 2003 by a Cabinet Resolution requiring an increase of 5% 
instead of 2%.  According to the authorities, since the respective quotas were introduced, insurance companies 
have been mainly unable to increase the share of nationals in their staff.    
In 2004, a Council of Ministers' resolution imposed a requirement that 2% of staff of "trade sector firms" that 
employ more than 50 workers be nationals.  Trade sector firms generally include companies involved in 
trading and repair of goods, including motor vehicles. It is too early to draw conclusions on the 
implementation of this measure in the trade sector.  In February 2005, the newspaper Gulf News  reported that 
Tanmia was preparing a list of companies that did no t meet the ratio requirement for the hiring of UAE 
nationals;  it was announced that legal action would be taken against these companies.    
Tanmia also offers training programmes for nationals to ensure that they have adequate skills to be hired by 
the private sector.  In addition, the authorities of certain emirates have also developed programmes to 
encourage entrepreneurship among nationals through the creation of small and medium-sized enterprises 
(SMEs). These programmes offer a simplified applica tion process, low interest rates, and favourable 
repayment terms.   
Source: Information provided by the authorities.  
(2) RECENT ECONOMIC DEVELOPMENTS  
9. The UAE has grown from a small fishing and pear ling nation (before its first export of oil in 
1962), into one of the strongest and fastest-gr owing economies in the world.  The tremendous 
industrialization effort undertaken since 1980 took pl ace first in energy-intensive industries, on the 
basis of the UAE's comparative advantage, and sub sequently in high-technology industries, such as 
office and consumer electronics or medical equipment.  The country was also the first in the region to 
strategically develop both airport and seaport fac ilities in the 1960s, and since then has continuously 
recorded strong expansion in transport services to  become the region's main transport hub.  In 
addition, important public investment has been made  to develop tourism, including sports facilities, 
leisure parks, and centers for international conferen ces and events;  Dubai has made a bid to host the 
2016 Olympic games. 
10. Since 1999, the UAE's lowest economic growth has been 1.7% (in 2001) (Table I.2).  This 
performance has been supported by windfall revenue  from the doubling of oil and gas prices between 
1998 and 2001, and again between 2001 and 2005;  the revenue has financed activities in, inter alia , 
manufacturing, construction, and financial services.   Inflationary pressures have been mounting since 
2000, reflecting soaring domestic demand (as oil pr oceeds have been increasi ngly reinvested locally) United Arab Emirates  WT/TPR/S/162 
 Page 5 
 
 
and increased capital inflows.  The Consumer Price Index (CPI) is estimated to have increased by 
4.6% in 2004 with a large rise in rents in particular  (36% of the CPI's basket);  a larger increase is 
predicted for 2005.10   
Table I.2 
Main economic indicators, 1999-05 
 1999 2000 2001 2002 2003 2004a 2005a 
National accounts (annual % change in real 
terms)         
GDP 4.4 12.4 1.7 2.6 11.6 7.8 7.3 
   Agriculture and fishing 17.9 18.9 -2.2 0.8 0.3 9.7 ..
   Mining and quarrying 4.1 3.9 2.9 2.3 2.8 7.0 ..
   Crude oil production -4.5 13.1 0.0 -7.6 13.6 2.9 7.0 
   Manufacturing 8.9 30.4 0.9 3.5 7.9 15.0 ..
   Electricity, gas and water 5.8 5.7 4.9 1.0 18.1 11.0 ..
   Construction 1.8 0.9 2.0 18.4 17.0 8.0 ..
   Services 7.5 8.7 3.5 8.2 11.1 8.8 ..
      Trade, restaurants, and hotels 4.0 3.4 1.2 17.3 17.3 6.2 ..
      Transport and communications 9.9 14.3 6.1 7.1 7.8 10.1 ..
      Finance, insurance 5.2 7.6 12.1 0.9 8.1 15.9 ..
      Real estate 3.8 0.9 1.6 11.2 8.1 14.1 ..
      Government services 11.1 13.4 3.1 -1.3 8.5 3.9 ..
      Other services 6.0 7.2 7.0 22.7 9.9 4.8 ..
      Less:         
         Imputed bank service charges -8.4 -14.9 22.9 7.9 1.2 11.5 .. 
        
Final consumption 6.4 11.8 5.1 14.6 11.0 14.1 ..
   Private consumption 7.9 12.3 5.3 19.7 11.3 16.8 ..
   Government consumption 2.5 10.4 4.6 0.3 10.1 4.7 ..
Gross fixed capital formation 3.3 6.5 4.8 5.0 15.7 11.1 ..
Changes in stocks 7.8 7.2 4.2 2.8 2.8 15.0 ..
Exports of goods and non-factor services 9.3 34.1 -1.9 7.8 27.7 22.7 ..
Imports of goods and non-factor services -1.7 8.8 7.7 13.8 20.5 18.0 ..
          
Consumer prices (annual average) .. 1.4 2.8 2.9 3.1 4.6 6.0 
        
External sector    
Current account (% of GDP) 1.6 17.2 9.4 5.0 8.7 11.8 19.0 
Central Bank reserves (US$ billion,  net) 10.9 13.8 14. 3 15.3 15.1 18.6 ..
In months of imports of goods and non-factor 
services 4.3 4.9 4.6 4.0 3.3 3.5 ..
Nominal exchange rate (Dh per US$) 3.7 3.7 3.7 3.7 3.7 3.7 ..
Nominal effective exchange rate (index 2000 = 100) 95.2 100.0 105.7 103.5 94.4 88.7 ..
Price of oil (US$/barrel, Dubai, annual average)  17.5 27.5 23.9 24.8 28.1 36.3 49 
        
Consolidated government finance (US$ m illion - current prices, end of period) 
Receipts 14,889 24,422 21, 359 17,995 22,894 30,109 ..
Expenditure 20,569 22,476 26,020 23,585 24,932 25,428 ..
   Of which:  subsidies and transfers .. 3,877 5,481 4,386 3,096 3,362 ..
Balancec -5,680 1,947 -4,661 -5,590 -2,038 4,681 ..
Balance (as % of GDP)c -10.3 2.8 -6.7 -7.5 -2.3 4.5 ..
Non-hydrocarbon fiscal balance  (as % of GDP)c -25.1 -20.4 -26.9 -22.3 -19.8 -14.7 ..
        
External debt (US$ million) 18.8 18.2 19.4 16. 7 16.5 15.8 16.0 
External debt (as a % of GDP) 34.0 25.8 27.9 22.3 18.7 15.1 12.5 
        
Financial indicators (%)         
Three-month interest rate .. .. 3.36 1.18 0.68 1.60 ..
     Table I.2 (cont'd) 
                                                      
10 Real estate prices have soared in certain areas, partly following Dubai’s decision to allow foreign 
ownership of land and property for real estate developments. WT/TPR/S/162 Trade Policy Review 
Page 6 
 
 
 1999 2000 2001 2002 2003 2004a 2005a 
Business lending rate .. .. 8.06 6.82 5.59 5.87 ..
Money supply (M1), annual change  8.9 12.6 15.8 19.2 23.8 38.7 ..
Money supply and quasi-money (M2)  11.4 15.1 15.5 15.6 16.1 23.2 ..
.. Not available. 
a Preliminary estimates. 
b Negative sign indicates depreciation. 
c Negative sign indicates deficit.  
Source:  IMF, Staff Report , various issues.  
11. The consolidated budget frequently runs large defi cits (Table I.2).   However, in 2003 and 
2004, the surge in hydrocarbon prices led to a rise in government revenue11;  a large fiscal surplus was 
recorded in 2004, and was also expected in 2005.   The non-hydrocarbon fiscal deficit varies between 
a fifth and a third of GDP (Table I.2).  The authoriti es indicated that steps have been taken to reduce it 
by containing the growth of spending, and reducin g producer subsidies and transfers.  The measures 
include reductions in agriculture s ubsidies, and an increase in pump petrol prices by an average of 
20% during 2005.  The Emirate of Abu Dhabi has si gnalled its intention to turn increasingly to the 
private sector to shoulder the costs of water and elect ricity (Chapter IV(3));  this should help to reduce 
subsidies as these utilities are generally provided to the population at subsidized rates.  A national 
value-added tax system is also being explored to  increase public revenue.  In April 2005, however, the 
authorities announced that salaries of federa l employees and Abu Dhabi government employees 
would increase by 25% in the case of nati onals, and 15% for non-nationals.   
12. Monetary policy is conducted by the Centra l Bank of the UAE (CBU), which has authority 
over most financial institutions, except the recently created Dubai Internationa l Financial Centre.  The 
thrust of Central Bank monetary policy is to accumulate substantial reserves with a view to 
maintaining the currency's peg to the dollar.  The main instruments to regulate domestic liquidity are 
the CBU's  certificates of deposit of up to 18 months maturity and the reserve requirements.  Domestic 
interest rates have largely moved in tandem with U.S. rates.  In 2003-04, the monetary environment 
was that of high levels of liquidity and low interest  rates, reflecting the international environment as 
well as the large inflow of resources related to  the oil boom and to the strongly growing economic 
activity.  The three-month inter-bank rate for the UAE dirham declined to 0.7% in 2003 before rising 
again to 1.6% in 2004.  Real interest rates have been negative since 2002.   The broad money stock 
has been increasing rapidly, well above the rate of GDP growth (Table I.2). The rise reflects rapidly 
increasing bank credit to the private sector and to state-owned enterprises.   
(3) TRADE PERFORMANCE AND INVESTMENT  
13. The UAE is a trading nation, as witnessed by its high ratio of imports plus exports (of goods 
and services) to GDP, i.e. around 145%.  The UAE is also an important participant in global capital 
markets through several investment institutions, including its official Abu Dhabi Investment 
Authority, DP World, Dubai Holdings, and Abu Dhab i International Petroleum Investment Company.  
Its current account has been in surplus since indepe ndence in 1971, despite large current transfers by 
expatriate workers and the permanent deficit of the services account, the UAE remains a net services 
importer.  This surplus has increased strongly since 2002, as a result of a surge in merchandise exports 
(in line with rising oil prices), to nearly  12% of GDP in 2004 (Table I.2).   
                                                      
11 The revenue comprises a royalty on proceeds of companies holding concessions in the hydrocarbon 
sector;  income from government funds invested abroad (since 1980) by the Abu Dhabi Investment Authority 
(ADIA, see below);  revenue from a 20% tax on profits made by foreign banks;  and marginal revenue from import taxation.   United Arab Emirates  WT/TPR/S/162 
 Page 7 
 
 
14. The trade balance is traditionally in strong su rplus, reaching US$28.1 billion in 2004 (with an 
estimated US$40 billion in 2005) (Table I.3).  The main source of export revenue is crude oil and 
condensates (Table AI.1).  Exports of petroleum products have tripled since 2000 to an estimated 
US$5 billion in 2005, while gas exports have more than doubled in value.  The second largest source 
of revenue is re-exports (around one  third of total merchandise exports).  This reflects the importance 
of the UAE as a centre for re-exports, mainly to Indi a, Iran, and Iraq.  A s ubstantial portion of the 
large recent increase in re-exports reflects the role of the country's ports in the supply of merchandise 
for the reconstruction of Iraq. 
15. Nearly 60% of non-hydrocarbon exports originate in free zones, mainly the Dubai Jebel Ali 
Free Zone Authority (Jafza);  the main produc ts exported from Jafza consist of machinery and 
appliances, including computers and other consumer electronics.  The main non-hydrocarbon exports from outside the free zones are clothing, tobacco products, and aluminium.    
16. Exports of crude oil are directed mainly to Japan; Chinese Taipei; and other East-Asian 
countries (Table AI.2).  Non-oil exports are main ly shipped to India (30% of non-oil merchandise 
exports), to Arab countries (23%), and to Europe (1 1.5%).  Re-exports are destined to Iran and India 
(17% each), and GCC countries (11%).   
17. Imports are diversified in terms of products a nd origin.  The main imports are machinery and 
transport equipment, food, and chemicals (Table AI.3).  The main suppliers are India, China, the 
United Kingdom, Japan, and Germany (Table AI.4).   
18. It is likely that foreign direct investment (F DI) inflows have advanced rapidly since 2000, 
though official statistical data are not available.   The IMF estimates that net FDI inflows reached 
about US$11 billion in 2005.  Leading sectors attracti ng FDI appear to be oil and gas field machinery 
and services, power and water, computers, medical equipment, telecommunications, and franchising.
12  
The bulk of FDI has been directed into real estat e projects, and into the free zones (Chapter III(3)).13  
Jebel Ali Free Zone in Dubai in particular has a total estimated a nnual revenue of over US$8.5 billion.  
The bulk of the companies in Jebel Ali are active in the assembly of electronic products, light 
engineering and manufacturing, as well as in di stribution services benefiting from low costs, 
efficiency enhancing infrastructure, and logistics services.  
19. According to UNCTAD, 156 greenfield investment s were made in the UAE in 2004. A factor 
contributing to the expansion of inward FDI may have been the liberalization of the real estate 
subsector in Dubai, and the resulting investment boom both in housing and in development projects 
such as Dubai Internet City, Knowledge Village, S ilicon Oasis, Dubai Interna tional Financial Centre 
and others.14  Outward FDI flows have also been large r ecently, as a result of acquisitions abroad by 
Dubai Ports International and its successor DP World (in port services), by Etisalat (in telecommunications), by Dubai Islamic bank (in banki ng), and by other state-owned enterprises.    
                                                     
 
12 According to the Abu Dhabi Chamber of Commerce. 
13 For background and information on UAE free zo nes, see http://www.uaef reezones.com/home.html. 
14 UNCTAD (2005). WT/TPR/S/162 Trade Policy Review 
Page 8 
 
 
Table I.3 
Balance of payments, 2000-05 
(US$ billion)  
 2000 2001 2002 2003 2004a 2005b 
Trade balance 18.8 14.0 14.9 21.5 28.1 40.4 
   Exports 49.6 47.5 52.5 67.3 82.3 103.4 
      Oil and its by-products 23.4 19.7 20.3 25.8 33.3 46.5 
         Crude oil and condensates 21.7 17.6 16.6 22.1 29.6 41.5 
         Petroleum productsc 1.7 2.1 3.6 3.8 3.7 5.0 
      Gas 3.7 3.3 3.3 3.9 4.7 6.9 
      Non-hydrocarbon 7.5 8.5 10.6 14.1 16.6 18.3 
         Exports by emirates 2.0 2.0 2.4 2.9 3.5 3.9 
         Free-zones exports 5.5 6.4 8.3 11.3 13.1 14.5 
      Re-exportsd 15.0 16.0 18.3 23.4 27.7 31.7 
         Non-monetary gold 1.9 1.9 1.9 2.0 2.3 2.3 
   Imports -30.8 -33.5 -37.5 -45.8 -54.2 -63.0 
      Imports by emirates -25.9 -26.8 -29.4 -35.4 -42.1 -48.7 
      Free zones -4.9 -6.7 -8.1 -10.4 -12.1 -14.3 
Incomes, net 3.8 2.9 0.8 -0.1 0.1 3.6 
      Banking system 1.6 1.0 0.5 0.4 0.6 1.5 
      Private non-banks 0.4 0.3 0.1 0.1 0.1 0.1 
      Government 4.0 3.0 2.2 1.9 3.8 5.7 
      Foreign partners- oile -1.9 -1.1 -1.9 -2.3 -4.1 -3.3 
      Foreign partners- gase -0.3 -0.2 -0.2 -0.2 -0.4 -0.4 
Services, net -6.4 -6.2 -7.7 -9.1 -10.8 -13.0 
   Credits 2.2 2.4 2.6 2.8 3.0 3.1 
      Travel 1.1 1.2 1.3 1.4 1.6 .. 
      Transport 0.8 0.8 0.9 0.9 1.0 .. 
      Government services 0.3 0.4 0.4 0.4 0.5 .. 
   Debits -8.6 -8.5 -10.3 -11.8 -13.8 -16.1 
      Travel -3.0 -3.0 -3.7 -4.0 -4.5 .. 
      Transport -1.1 -1.1 -1.2 -1.2 -1.5 .. 
      Government services -0.3 -0.3 -0.4 -0.4 -0.4 .. 
      Freightf -4.2 -4.0 -5.1 -6.2 -7.4 .. 
Transfers, net -4.0 -4.2 -4.4 -4.7 -5.1 -6.5 
   Private -3.7 -3.9 -4.1 -4.4 -4.6 -6.1 
   Official -0.3 -0.3 -0.3 -0.3 -0.4 -0.4 
Current account  12.2 6.5 3.8 7. 7 12.3 24.5 
Financial account  -9.7 -4.1 -7.3 -7.8 -10.9 -22.4 
   Private capital -3.8 -3.9 -1.9 3.9 7.7 6.6 
      Direct investment, netg -1.6 0.7 3.1 3.3 9.0 10.3 
         Outward -2.1 -0.4 -0.4 -1.0 -1.0 -1.0 
         Inward 0.5 1.2 3.5 4.3 10.0 11.3 
      Portfolio secur ities 0.0 0.0 0. 2 0.0 2.0 1.5 
      Commercial banks -3.2 -2.5 -6.9 -1.1 -5.5 -4.4 
      Private non-banks 1.0 -2.1 1.7 1.7 2.2 -0.8 
   Official capitalh -5.9 -0.2 -5.4 -11.7 -18.6 -29.0 
Errors and omissions 0.4 -2.0 4.7 -0.1 2.1 0.8 
Overall balance 2.8 0.5 1.1 -0.2 3.5 2.9 
.. Not available. 
a  Estimates. 
b  Projections. c  Includes fertilizers and lubricants.  
d  Not formally compiled;  estimated at 40-50% of emirates' imports. 
e  IMF staff estimates based on foreign partne r share of oil and gas sector net profits.  
f  Estimated freight to adjust imports from f.o.b. to c.i.f. basis.  
g  UNCTAD direct inve stment estimates ( World Investment Report ). 
h  Includes changes in government external assets.  
Source:  IMF (2005), Article IV Consultation – Unit ed Arab Emirates, Staff Report,  Washington D.C.  
20. The financial account registers large net outflows,  reflecting the regular placements of official 
capital abroad.  Most of this capital is managed by  the Abu Dhabi Investment Authority (ADIA), one United Arab Emirates  WT/TPR/S/162 
 Page 9 
 
 
of the world's largest government financial investment  vehicles.  ADIA is responsible for investing all 
of the Abu Dhabi Government's oil revenu es and assets worldwide.  ADIA has undisclosed 
investments generally estimated at about US$250 billion,  and is one of the most influential operators 
in international financial markets.  It is reported that its assets abroad incr eased by US$29 billion in 
2005.   
(4) OUTLOOK   
21. The outlook for the UAE economy is naturally sens itive to assumptions about the evolution of 
oil markets, including both oil prices and OPEC-m andated oil production quotas.  Based on current 
forecasts of a strong demand for energy products worl dwide, and on an oil price projection of US$46 
per barrel on average over 2006-10, the IMF forecasts  annual real GDP growth of about 4.5% over 
this period;  large fiscal and external current account surpluses are projected to persist.  Non-
hydrocarbon GDP growth is also expected to remain strong, supported mainly by large public 
investments in the tourism, transpor t, and construction subsectors.   
22. The UAE's large official assets accumulated ab road since the 1980 provide a sizeable and 
steady flow of income that could dampen the negativ e effects of a weakening of oil prices, and thus 
reduce the economy's vulnerability to oil markets.  Gr owth should also be supported by the numerous 
new projects coming on-stream.  However, the UAE 's long-term success in attracting foreign 
investment will require improved ownership rights for foreigners and a more efficient legal and 
institutional framework within which claims rela ting to foreign investment can be effectively 
addressed.