Economic situation
The United Arab Emirates is the most open economy in the Middle East and North Africa. The economy of the UAE is mainly based on the extraction and processing of oil and natural gas (the country owns 10 percent of the world's reserves of these resources). The industrial sector is actively developing, foreign trade is growing, construction is underway, and transport infrastructure is expanding.
The Emirates have undergone profound transformations since the discovery of oil fields more than 30 years ago, has turned into a modern state from impoverished small desert principalities. The largest oil producers are the emirates of Abu Dhabi, Dubai and Sharjah.
This industry has provided the UAE with one of the highest per capita incomes in the world. It is noteworthy that for many years these incomes have been invested in the development of tourism, trade, industry, the social sector, and agriculture.
As for the latter area, investments are primarily made in the construction of desalination plants. After all, agriculture is a traditional sector of the country's economy (2.5 percent of the GDP), but the development of this sphere is hampered due to the lack of freshwater and due to the environment peculiarities (only 0.5 percent of the UAE land is cultivated). Therefore, active investment in this industry is a prerequisite for phasing out of the UAE's dependence on food imports.
Metallurgy remains a major industry branch, primarily export-oriented aluminum production. The production of cement, chemical fertilizers, pharmaceuticals, ceramics, and clothes is actively developing.
Another important sector of the national economy is tourism. Since 2019, a set of economic measures designed to stimulate the tourism sector and create new jobs are being implemented.
The energy sector also plays a significant role in the country's economy. The UAE plans to receive more than 75 percent of the energy used by the country from renewable or alternative sources by 2050.
A significant contribution to the economy of the UAE is made by the banking sector. There are 52 banks in the country, including local and foreign.
The UAE lies halfway between the industrial economic routes of the Far East and Europe, which contributes to the country's transformation into an international economic center. Automobile, air and sea modes of transport are well-developed in the Emirates; seven international airports are cooperating with more than 200 airlines. The country has more than two dozen ports transporting more than 100 million tons of cargo annually.
The economic development of individual emirates is uneven. The largest contributors to the country's GDP are Abu Dhabi (60 percent) and Dubai (30 percent). The Northern Emirates of Fujairah, Ajman, Ras Al Khaimah and Umm Al Quwain are the least developed ones. At the same time, Abu Dhabi stimulates the economic development of the Northern Emirates by creating new industries and developing infrastructure.
In terms of industry, Abu Dhabi specializes in oil and energy projects, Sharjah – in light industry, the Northern Emirates – in agricultural production, mining and cement production. The Emirate of Dubai claims to be the regional center of trade in tourism, information, transport and commercial services.
The number of the economically active population is 1.6 million. Business etiquette, corporate culture, business standards, trade and economic relations and administrative procedures in the UAE are based on Western standards. The main language for business negotiations is English.
Foreign economic activity
The United Arab Emirates has been participating in the General Agreement on Tariffs and Trade since 1994, and since 1996, it is a member of the World Trade Organization. The country is also a member of the Arab Free Trade Zone.
The largest trading partner is Japan, which takes the largest share of oil and gas exports from the UAE. The biggest trade partner for non-oil trade is China. The top lines in the UAE import ranking belong to India, China, the USA, Germany, South Korea, Italy, Switzerland, Saudi Arabia, and the UK.
The leading exports are oil products, gold and precious stones, polymers and ethylene. As for the imports, the main commodity is gold, second place belongs to diamonds, cars are in third place, and the fourth place belongs to machinery and devices. The country feels the need for imported food products.
A lot of specialized international and regional exhibitions of various profiles are held annually in the UAE. The largest exhibition venues are located in Dubai and Abu Dhabi. The Emirate of Dubai was supposed to host EXPO 2020, but due to the epidemiologic situation, the World Exhibition has been postponed to 2021.
Advantages of doing business
· It is the world's third re-export market, only preceded by Hong Kong and Singapore. More than 80 percent of food products in the GCC (Gulf Cooperation Council) region, including Bahrain, Qatar, Kuwait, Oman, and Saudi Arabia, are imported through the UAE.
· The developed transport and logistics infrastructure provides for unimpeded access to the main markets of the Middle East, Asia, and Africa.
· There is liberal economic (including tax) policy, no income and profits taxes.
· It is the leading financial and economic center of the Middle East, a country with a capacious solvent market and a developed banking system which is sufficiently integrated into the global one.
· There is a stable political situation in the country.
· The country fosters domestic and foreign investment and develops the infrastructure of free economic zones. There are 36 free economic zones with different industry specialization in the UAE.
The pandemic impact. Economic recovery
The COVID-19 pandemic has caused a decline in all world markets. The UAE, like all the Middle East countries, was no exception. The Arabian Gulf states have been hard hit by plummeting oil prices, the purchasing indexes which look at prevailing economic trends have been reaching record lows, and the production has decreased for the first time in ten years. In the UAE, as elsewhere, some sectors experienced an unprecedented slump in demand, but others saw a huge spike. Online sales numbers across the board, be it a grocer, be it at a fashion retailer, an electronics retailer have increased exponentially. Entire sectors have had to adapt and move their businesses online. And mobilizing the latest technology has been vital in assessing the risk to both public health and the economy.
Dubai, which has one of the most diversified and non-oil dependent economies in the Gulf relying on sectors like hospitality, tourism, entertainment, logistics, property and retail, has been most affected by the pandemic.
To minimize the negative impacts of the epidemiologic situation, the country's leaders have taken some measures, mostly financial, to maintain economic activity. From mid-March, the UAE Central Bank moved to protect the economy, buffering banks and businesses with an economic support scheme worth around 65 billion euros, which is equal to about 17 percent of GDP. The package is directed at retail, SMEs in particular, and the most impacted sectors within the corporate world as well. New strategies to support businesses are being worked out.
According to recent surveys of the CCIs and financial lenders, these support measures have instilled considerable confidence. 42 percent of respondents in the UAE said they believed their companies could go back to business as usual within three to six months. Similarly, 64 percent of respondents here were confident in their company's ability to build skills for the future compared with just 48 percent globally.
Bilateral trade and economic relations
The UAE has traditionally been the main trading partner of the Republic of Belarus in the Gulf countries. There is a high level of political cooperation between the countries, and regular contacts, trade, economic, scientific, technical and humanitarian cooperation is developing intensively.
The main export items are tractors and trucks, trailers and semi-trailers, synthetic fibers, anti-detonators, antioxidants, inhibitors, thickeners, potash fertilizers, synthetic tow threads. A lot of work has been done to ensure that Belarusian dairy and meat products meet the requirements of the Arab market, so food exports are expected to grow. Main import items are propylene polymers, petroleum products, plastic plates, sheets, film, pharmaceuticals packaged for retail sale. A stable positive balance of foreign trade in goods remains.
Trade and economic cooperation issues are regularly revised by the Joint Committee on cooperation between the Government of the Republic of Belarus and the Government of the United Arab Emirates. In May 2014, the Belarusian Chamber of Commerce and Industry and the Federation of the UAE Chambers of Commerce and Industry signed an MOU on the creation of the Belarusian-Emirati Business Council, and its meetings are held alternately in one of the countries.
Representative offices of such Belarusian companies as Minsk Automobile Plant, Belarusian Steel Works, Sohra Group, and others carry out their activities in the UAE. There are 27 organizations registered in Belarus with the participation of Emirati capital.
Since 2008, direct flights have been operating between Minsk and Abu Dhabi. Tourist ties are actively developing. Belarus and the UAE are discussing simplifying the visa regime between the countries.
Belarus is interested not only in developing trade relations but also in implementing joint projects and exchanging experience. There is great potential in continuing investment cooperation, including in the field of agriculture. The possibility of creating joint ventures with the subsequent sale of agricultural and food products is being discussed. The UAE is also interested in the Belarusian experience in IT sector development.
Belarus actively participates in international exhibitions and investment forums held in the UAE. Traditionally, Belarusian companies are widely represented at GULFOOD international exhibition of food, beverages, hotel and restaurant business equipment in Dubai.
Promising areas of Belarus-UAE cooperation:
· petroleum chemistry;
· mechanical engineering;
· agricultural production;
· woodworking;
· electronics and equipment.
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