Economic Studies
United Arab Emirates

United Arab Emirates

Population 10.1 million
GDP per capita 37,733 US$
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major macro economic indicators

  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 3.0 0.8 2.9 2.5
Inflation (yearly average, %) 1.6 2.0 3.5 1.9
Budget balance (% GDP) -2.0 -1.6 0.6 1.3
Current account balance (% GDP) 3.7 6.9 7.2 7.5
Public debt (% GDP) 20.2 19.7 17.8 17.6

(e): Estimate. (f): Forecast.


  • Political stability
  • Progressively diversified economy
  • Liberal trade regime, growing integration with the world
  • Financial hub in the region
  • Strong financial buffers, improvement of the fiscal position
  • Business friendly environment, modern infrastructure


  • Limited flexibility of the monetary policy due to the currency peg regime
  • Exposure to volatility in oil prices
  • Reduced tourism flows to Dubai


Better growth perspectives due to higher oil prices and public spending

Despite having been negatively affected by lower energy prices, the UAE’s economy has benefited from its relatively diversified economy (total non-oil activity accounted for 71% of GDP in 2017). After recovering strongly in 2018, the growth is expected to accelerate during 2019. This improvement will be largely due to a higher level of oil production, higher oil prices, and increased government spending ahead of Expo 2020 (a universal exposition that will be held in Dubai). However, overall growth performance is expected to remain below its 2013-2017 average of nearly 4%.

The mining sector, which includes oil and natural gas production; will be positively affected by higher oil production following the expiry of the OPEC production cap, and increased energy prices. As of September 2018, UAE oil production already stood at 3 million bpd. This increase will contribute to growth performance.

Investments recovered in 2018 and are expected to strengthen during 2019 on the back of higher fiscal revenues. The government will be able to support the economy through a more supportive fiscal policy. Indeed, in June 2018 Abu Dhabi announced a 3-year AED 50 billion programme (USD 13.6 billion; equivalent to 1.2% of Abu Dhabi’s annual GDP) in order to promote growth, tourism and job creation. Also, the UAE has approved a USD 16.4 billion budget for 2019, a 17% increase from 2018. Private consumption remained under pressure in 2018 due to higher fuel prices, a new VAT, and the removal of some subsidies. However, higher government spending and improving growth should support household spending throughout 2019.

Because government spending depends on oil prices, their volatility presents a significant risk. Although the UAE’s economy is relatively diversified, oil revenues are still the main source of finance for economic activity (53% of total fiscal revenues in 2017). Separately, a tightening monetary policy stance also will represent a challenge for the private sector’s financing costs. The UAE dirham is pegged to the US dollar and the UAE central bank follows the footsteps of the US Federal Reserve. This means that interest rates in the UAE will likely continue to rise, weighing on the funding costs of companies. Tourism flows will be an important factor during 2019: the travel and tourism sector accounts for nearly 5% of the UAE’s national output. However, tourism flows in Dubai inched up by only 0.4% in January-August 2018 from a year earlier because of weaker economic growth in visitors’ countries (Iran, Oman, Saudi Arabia, etc.) and higher accommodation and restaurant prices after the introduction of the VAT.


Fiscal improvement on the horizon

After tightening in 2017, the fiscal stance has been slightly easing since 2018 on the back of higher oil revenues. In the first quarter of 2018, total spending rose nearly 16% from a year earlier, compared with an increase of 3.5% in total revenues. The return to a budget surplus is expected to also be supported by higher non-oil revenues in line with the increased economic momentum. Reduction in fuel subsidies and reduced capital transfers to government-related entities (GREs) should help to sustain the budget balance in positive territory. Meanwhile, despite the need to finance the budget deficits between 2015 and 2017, the general government gross debt level relative to GDP has remained low. Additionally, the UAE will continue to enjoy strong financial buffers with the sovereign wealth fund’s assets estimated at more than 300% of GDP.


Political stability

The UAE is considered as a “safe haven” for investments in the region and the economy was not significantly affected by the boycott imposed on Qatar in June 2017.The country, which is a constitutional federation, is governed by the Federal Supreme Council. It consists of the leaders of the seven emirates. The Federal National Council, which is the consultative council, has 40 members, of which half is elected and the rest is appointed by the rulers of the seven emirates. The latest election was held in 2015 and the next one is due in 2019, where no substantial changes are expected. The country is expected to remain politically stable, and should therefore continue to attract foreign investments.


Last update: February 2019

United Arab Emirates (UAE)


The most common methods of payment in the United Arab Emirates (UAE) are cash, credit and debit cards, Open Accounts, Letters of Credit, Documentary Collections, and cheques.

Cheques are the most common and preferred method of payment in the country, especially in commercial transactions, as there are no costs involved with issuing cheques, unlike transactions that are backed by a Letter of Credit or any other type of a bank guarantee. Cheques constitute a reliable debt recognition title that may be enforced directly before a judge. In addition, UAE criminal law states that a person who delivers a cheque in bad faith without sufficient consideration may be imprisoned.

Until 2016, post-dated cheques were considered the best protection against late payments, and were frequently used in the UAE as guarantees, as bounced cheques are considered as a criminal offence. The new law is silent regarding Non-Sufficient Funds (NFS) cheques, and only states in Article 32 that all the legal proceedings, procedures, and execution procedures against the debtor’s assets shall be suspended once a decision is initiated until the ratification of the scheme of composition. Composition is defined in Article 5of the new law as proceedings aiming to assist the debtor to reach a settlement with creditors pursuant to a scheme of composition under the supervision of the court, and with the help of a trustee to be appointed in accordance with the provisions of this law. In light of the above, any claims or legal proceedings filed against the debtor – whether related to NSF cheques or another instrument (this also applies to criminal proceedings relating to NSF or bounced cheques) – will be suspended once the court has accepted the debtor’s application for the aforementioned prevented composition. It worth noting that any claim related to an NSF cheque will be treated in the same way as any other unsecured claim which may be filed against the debtor.

UAE banks are part of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is used when transferring money between banks, particularly for international wire transfers.


Amicable phase

Debt collection begins with the amicable approach, during which the debtor receives a notice for payment, followed by a phone call from the creditor or an agency, with the goal of reaching a payment agreement.


Legal proceedings

The UAE Courts are comprised of:

  • the Court of First Instance;
  • the Court of Appeals;
  • the Abu Dhabi Supreme Court.

Located in each Emirate, courts of first instance have general jurisdiction and include a Civil Court, a Criminal Court and a Shariah Court. Following a judgement from one of these courts, the concerned parties have the right to appeal to the Court of Appeals on factual and/or legal grounds. Following this, aggrieved parties have the right to appeal to the Supreme Court on matters of law only. Shariah Court handles civil matters between Muslims.


Fast-track proceedings

An order of payment is a procedure where a party applies to the courts for summary judgment against a defendant for commercial debts, substantiated by a valid but unpaid commercial instrument such as a bill of exchange, promissory note or cheque. If a defence is filed, the dispute must be solved via an ordinary lawsuit before the court of first instance.


Ordinary proceedings

Proceedings start by filing a plaint (complaint) in the relevant court. It must meet procedural requirements, and include both the debtor’s information and the details of the debt. The court issues a summons to be served to the defendant, which includes an endorsed hearing date.

Once an answer has been filed by the debtor, the trial process is adjourned to allow the creditor to respond. Further adjournments are given so that memoranda can be submitted by both parties. Once the court believes that the case has been sufficiently pleaded, it reserves the matter for judgment. The entire proceeding is based on written submission supported by documentary evidence. The court will issue remedies in the form of specific actions and compensatory damages. Injunctive relief is not generally available and attachment orders are difficult to obtain.

Enforcement of a Legal Decision

A court judgment becomes enforceable once it is finalised. If the debtor fails to comply with the court’s decision, the creditor may request enforcement mechanisms before the judge, such as an attachment order, or even the imprisonment of the debtor.

Any foreign awards must first be recognized as a domestic judgment. When bilateral or multilateral reciprocal recognition and enforcement treaties exist, this requirement is simply a formality. In the absence of such agreements, an exequatur procedure is provided by domestic private international law.

Insolvency Proceedings

On September 4, 2016, the final draft of the Federal Law on Bankruptcy was approved. The new insolvency law proposes three new insolvency procedures:


Financial Reorganization Procedure

An out of court, private conciliation process that is applicable to entities who have not yet formally entered the zone of insolvency, which has the aim of achieving a consensual, private settlement between parties. An independent mediator with bankruptcy expertise is appointed by the commission for a period of up to four months to oversee discussions between the debtor and its creditors.


Protective Composition Procedure (PCP)

A debtor that is (a) experiencing financial difficulties, but is not yet insolvent; or (b) has been in a state of over-indebtedness or cessation of payments for less than 45 days, proposes a compromise with its creditors outside of formal bankruptcy proceedings. The PCP includes a moratorium on creditor action (including enforcement of secured claims) and places the debtor under the control of an office holder appointed from the Commission’s (the government agency that has the authority to oversee the insolvency proceedings) roll of experts, for an initial observation period of up to three months.

Other key tools of the PCP process include the ability to raise debtor-in-possession (DIP)-style priority funding, which may be secured on unsecured assets or take priority over existing security, and ipso facto previsions that prevent the invocation of insolvency-linked contractual termination provisions – provided the debtor performs its executor obligations. The debtor is given time to file a plan, which is then voted on by creditors.



The procedure is split into two elements:

  • a rescue process within formal bankruptcy proceedings, which is procedurally similar to the PCP (including an automatic moratorium and the ability to raise DIP funding);
  • a formal liquidation procedure.