A federation of seven emirates, the UAE is home to the world’s third largest oil reserves, but is undergoing transition into a diversified economy. Tourism, transportation and financial and business services, alongside pharmaceuticals and technology, are important and growing sectors. Dubai, with comparatively smaller oil reserves, has been boldest in this transition and has reduced the portion of its GDP based on oil and gas output to 25%.
The UAE has also capitalised on its location as the mid-point between Europe and Asia, developing hub airports in Dubai and Abu Dhabi. Dubai International Airport is now the world’s busiest by international passenger traffic. The Dubai International Financial Centre, one of many free trade zones in the UAE, provides a platform for business and financial institutions to operate in the region.
Consequently, the UAE stands out as a ‘safe haven’ for both local and international investors in the Middle East, attracting businesses and capital from across the region and into the region.
Overall, the UAE’s economy has shown volatile growth over the last three decades, but the highs and lows have become less extreme in recent years. Following a sharp contraction of economic growth in 2009, when the economy shrank by 5.2%, economic growth is currently strong, having resumed in the region of 5% per annum since 2011.