In connection with the covid-19 pandemic, the economy of the United Arab Emirates recorded a decrease of 5.5% of GDP in 2020. According to another government prediction, a return to growth of approximately 3.6% is expected next year. Although the country’s economy is relatively well diversified, it is still somewhat dependent on the oil trade.
In the coming years, the driver of further economic growth should be exclusively the non-oil sector, especially projects connected with the world exhibition EXPO 2020, which, due to the pandemic, was postponed to the period from October 1, 2021 to March 31, 2022. The organization of the world exhibition will provide the economy with a new growth impulse in connection with the expectation of a large number of new investors and visitors, which will greatly support the increase in consumption and bring increased demand for services, for example.
The strategic plans of the national economy of the United Arab Emirates are primarily based on the digital economy and are intended to contribute to the creation of opportunities for foreign direct investment and overall economic development. One of the government’s main long-term goals is to increase economic security by gradually digitizing the economy and implementing blockchain technologies, especially in financial transactions and services.
Since the outbreak of covid-19, the country’s federal government has released a stimulus package to stabilize the economy totaling AED 388 billion ($10billion), equivalent to 2% of GDP. The vast majority of measures concern the provision of sufficient liquidity for small and medium-sized companies and the reduction, or complete abolition, of mandatory fees in connection with business (renewal of a business license, granting of a work permit, etc.). The country has significant financial reserves and a stable banking sector.
As an integral part of its medium-term strategy to combat the current global drop in oil prices due to the covid-19 pandemic, the United Arab Emirates has issued an international bond tranche of USD 7 billion, which should ensure sufficient funds in the budget at a time of expected reduction in revenues from the sale of oil. The UAE has one of the most diversified economies in the entire GCC region and no major risks are expected from this perspective. The federal state budget for 2021 envisages spending of AED 58 billion.
Post-COVID-19 opportunities for foreign exporters
Electrotechnics
According to allcountrylist, the United Arab Emirates is one of the few countries with its own space program. The Mars mission project is in an active phase, when an interplanetary probe called “Hope” was launched in July 2020 and successfully entered orbit in February 2021. Its main goal is to study the red planet’s atmosphere. Investments in space technology (telecommunications satellites) have currently reached a total of 4 billion USD.
At the end of 2019, the United Arab Emirates Space Agency presented a new national strategy and investment plan (National Space Strategy 2030 and National Space Investment Plan) to ensure further support for the development of expertise, space tourism and space exploration missions. Due to the absence of a local electrical engineering industry, almost all electrical engineering is imported.
ICT
In connection with the covid-19 pandemic, the country’s economic policy focuses significantly on strengthening digitization and the further development of infrastructure and communication with the state administration. In this direction, the new 5G technology, which the United Arab Emirates is starting to use in all economic areas, will be used. The information technology market is growing at an average rate of approximately 4.5% per year. The increased demand for IT services is caused by the dynamic government strategy of e-government, the building of so-called smart cities and the associated requirements for the security of data networks and smart applications. In the future, cyber security is to become the main growth factor of interest, especially in ICT services.
Defense industry
The UAE has been heavily involved in the fight against terrorism, both internally and externally. This, along with strained relations with Iran, is reflected in the growth of defense and security spending, which is expected to grow at a rate of 7% per year over the next 5 years. The federal government also intends to increase spending on homeland security. The priority areas are the protection of strategic infrastructure and personnel and cyber security. Opportunities for Czech companies are in the supply of security technology, radar technology, communication technology, light weapons and ammunition, and IT services.
Embassy of the Czech Republic in Abu Dhabi
e-mail: [email protected]
www.mzv.cz/abudhabi
