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United Arab Emirates: an incubator of globalization

United Arab Emirates recognized among the best places where to expand a business.

Expo 2020 Dubai confirms the United Arab Emirates as the most pro-active country in the economic scenario of the MENA region. This leadership is the result of the process that started back in 1971, with the independence of UAE and focused on economic, social, and cultural development.
Nowadays, the government is trying to diversify its economy, moving from oil and gas to a more international market strongly supported by foreign investments in the country.

The numbers behind the growth

The contraction of the GDP during the Covid pandemic pushed the government to accelerate towards this diversification. As an oil-exporting economy, the UAE suffered a loss of 6.1% for 2020, double compared to the global average of -3%.

In 2021, the GDP rebounded to +3%, and so it is estimated in the following years. The response to the pandemic (UAE are among the most vaccinated countries in the world), the activities related to Expo 2020, and the increase in oil prices made this growth possible. This estimate by the International Monetary Fund places the UAE next to Germany in the international growth chart.

GDP trend
Source: ExportPlanning

If we continue comparing UAE to Germany, we find other interesting numbers. The GDP pro capita of both nations is similar (Germany 50.788 $, UAE 43.538 $), allowing to maintain high living standards to the Emirati population. It is not new that the UAE is a pole of attraction for the premium and luxury sectors.

UAE compared to Germany
Source: ExportPlanning

The index of Economic Freedom (published by The Heritage Foundation) confirms the UAE as a perfect place for doing business. The UAE ranks 14th place worldwide, among the “prevalently free” economies. UAE score is 76.9 pts (100 is the maximum degree of freedom), better than the German one (72.5 pts). This score reflects the relatively more effective judicial, fiscal, and regulatory systems.

Index of economic freedom
Source: ExportPlanning

As said before, a reform process that opened to international markets in the latest years brought different foreign investments to the country. These investments and the introduction of free zones led the country to become an incubator of globalization. All of this attracted the know-how and professionalism that have sustained the growth of the country, creating a loop that constantly attracts new businesses.

Nowadays, UAE is the largest trading country in the Middle East. Raw materials, ICT equipment, means of transport (cars among the others), fashion, and precious are the backbone of the imports.

Let’s talk now about the risk profile

The riskiness of the country appears limited and depends on oil and gas prices. Apart from the intrinsic risk (that depends on the fluctuation of the energy market), the main risk could be the initial approach to the market. The United Arab Emirates requires knowledge of the market and correct SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis before aiming at this target market.

Risks chart
Source: ExportPlanning

As SVA Group, we opened our office in Dubai 10 years ago. Our External Export Manager will be pleased to assist you with an analysis that will help you with the internationalization of your business. Check out the page dedicated to their service at this link, and do not hesitate to drop us an e-mail at info@svadvisory.com.

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