UAE's rapid economic growth fueled by Expo 2020, nuclear energy investment, new gas finds
In collaboration with the Federation of Arab News Agencies, FANA, the Emirates News Agency, WAM, produced a detailed report on the current status of the UAE economy.
As 2020 unfolds, the positive dynamic in January and February is auguring well for the UAE, with new gas finds and a series of mega developmental projects, announced over the past few months, giving multiple shots in the arm for the country's economy, according to international economists.
Several indicators, supported by specialist international reports, show the UAE economy approaching significant milestones in various sectors and platforms, most notably the energy sector, where two gas finds have recently been announced in Dubai and Sharjah. Abu Dhabi National Oil Company, ADNOC, also declared plans to increase its oil production to four million bpd by the end of 2020. The first unit of the Barakah Nuclear Power Plant is also expected to be launched this year, producing electricity that will supply 25 percent of the country’s needs.
With the launch of Expo 2020 Dubai in October, the UAE economy is expected to make significant strides in all sectors, with the long-term financial proceeds of the World's Greatest Show projected to amount to AED122.6 billion, according to an independent study published by Ernst and Young.
The beginning of 2020 saw the UAE announced the discovery of a new natural gas field in Jebel Ali with an estimated reserve capacity of 80 trillion cubic feet of gas - a significant indicator of the future success of the national economy. The field in Jebel Ali will ensure gas self-sufficiency and long-term energy security to support the country’s future major development projects.
The Sharjah National Oil Corporation, SNOC, announced the discovery of a new natural gas and condensate field in the emirate, called 'Mahani,' which has a flow rate of up to 50 million standard cubic feet per day.
In Abu Dhabi, the Abu Dhabi National Oil Company, ADNOC, announced the award of two contracts for the construction of offshore facilities for the Dalma Gas Development Project located about 190 kilometres northwest of Abu Dhabi city and valued at AED6.06 billion or US$1.65 billion. The two engineering, procurement and construction contracts are expected to be completed in 2022, enabling the Dalma Gas Development project to produce around 340 million standard cubic feet per day (mmscfd) of natural gas.
These announcements followed ADNOC’s announcement during Abu Dhabi Sustainability Week 2020 in January that the country’s crude oil production capacity will increase to four million barrels per day by the end of 2020.
In addition, the significant yields of the construction, tourism and banking sectors attest to the resilience of the country’s economy.
By the end of 2019, the UAE approved the largest ever zero-deficit federal budget of AED61.354 billion, one-third of which is allocated to social development, another third to government affairs, while the rest of the budget is allotted to infrastructure, economic resources and living benefits.
The Federal Authority for Nuclear Regulation, FANR, announced the issuance of the operations licence for the first unit of the Barakah Nuclear Power Plant, which will produce electricity covering 25 percent of the country’s needs, and will prevent emissions amounting to some 21 million tonnes annually.
With regards to real estate projects, six residential compounds across the UAE will be delivered to Emiratis during 2020 under the Sheikh Zayed Housing Programme at a cost of over AED2 billion, including 1,726 villas in Dubai, Ajman and Ras Al Khaimah.
The programme features a package of housing projects, including 11,000 individuals housing units, along with 2,936 houses as part of four housing neighbourhoods under construction, which will be delivered in 2020 and 2021, respectively.
In February 2020, the Sheikh Mohamed bin Zayed Residential City was launched in Fujairah, costing some AED1.9 billion.
The city, which includes 1,100 villas, is a milestone in Fujairah’s housing sector, benefitting some 7,000 citizens. The city also includes 20 parks of various sizes and plots of land for public services, such as schools, mosques and commercial stores, as well as a community and cultural centre.
On 12th February, the country announced the completion of the general plan for the Jabal Al Dhanna Housing Project in Al Dhafra, Abu Dhabi, at a total cost of some AED2.7 billion.
The master plan includes over 1,449 apartments, two schools, eight mosques, a community centre, a medical clinic, and more than 700 detached villas and townhouse villas, which will upon completion accommodate about 12,000 people.
In Dubai, the ongoing construction of Dubai Creek Tower is expected to be completed before the launch of Expo 2020 Dubai in October 2020. A staggering 928 metres tall, the tower is set to break the world record held by the Burj Khalifa.
At a cost of $1 billion, the new cable-tied tower is planned as the centrepiece to a major new district based on the banks of Dubai’s creek close to the wildlife sanctuary at Ras Al Khor, serving as a tourist landmark reflective of the emirate’s impressive urban development, cultural diversity and wellbeing of the UAE’s people.
An independent study published by financial consultants Ernst and Young noted that the UAE’s investment in Expo 2020 will generate proceeds of AED122.6 billion during the period from 2013 to 2031. It will create 905,000 job opportunities and 200 years of work during the same period.
During the first six months of the event, visitor spending on tickets, merchandise, food, drinks, hotels and travel will help push the economy in a positive direction. The Expo is expected to attract 25 million visitors, 70 percent of whom from overseas.
The UAE economy enjoyed a solid start this year, supported by last year’s achievements, most notably a real GDP growth of 2.4 percent, as per the estimates of the Central Bank of the UAE.
In 2019, the UAE economy proved its strength, flexibility and ability to overcome challenges and global economic changes, driven by the key successes achieved at the tourism and financial services sectors, and the growing investments in infrastructure, strategic projects and value-added economic sectors.
A report issued by the Ministry of Economy confirmed that the value of the country's merchandise exports grew by 4.2 percent, reaching $330.2 billion in 2019, compared to $316.9 billion in 2018. Merchandise imports grew by 4.3 percent to $245.4 billion in 2019, compared to $235.4 billion in 2018. In light of this growth in exports and imports, the UAE's trade surplus is expected to increase by 4.1 percent in 2019, hitting some $84.8 billion.
In 2019, the financial sector made many achievements, most notably a significant increase in banking assets which broke the AED3 trillion mark, strengthening the country’s stature and financial profile in the Arab Gulf region and the Middle East.
The total foreign currency assets held by national banks also increased to almost AED381 billion in 2019, a rise of some five percent compared to AED363.27 billion in 2018. Foreign deposits accounted for 29.2 percent of the total deposits held by national banks, surging to AED1.303 trillion at the end of December 2019.
The continual growth in foreign currency deposits in Emirati banks reflects customer confidence in the country's robust financial profile as testified by several international financial institutions.
The UAE has likewise reinforced its position as a key international tourist destination, with the number of hotel guests increasing to 26 million by the end of 2019.
The UAE ranks first regionally and 33rd globally in the 2019 edition of the Travel and Tourism Competitiveness Report, issued annually by the World Economic Forum, with a score of 15.3 points.
The significant development of the tourism sector is driven by developers and investors having built thousands of hotel units, comprising over 180,000 hotel rooms in more than 1,130 hotels around the country.
In terms of global competitiveness, in 2019 the UAE ranked first in several economic indicators in the Global Competitiveness Report 2019 issued by the World Economic Forum at its annual meeting in Davos, Switzerland, which evaluated the competitiveness of 141 countries.
In sub-indicators, the UAE came first globally in the macroeconomic stability, second in ICT adoption and fourth in the product market category. The UAE also improved its rankings in eight out of 12 key pillars - infrastructure; ICT adoption; skills; product market; labour market; business dynamism and innovation capability.
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