The United Arab Emirates, once seven independent states under British oversight, has emerged into a global economic powerhouse because of its abundant natural resources, successful financial investments, and extensive focus on real estate and tourism. Having the world’s sixth largest oil reserves and fifth largest natural gas reserves, the UAE is poised for year over year economic growth, which has allowed them to focus more heavily on economic diversification and political reform. As this desert country continues to grow, so does their reliance on energy, which has spurred a major governmental effort to identify renewable energy sources to offset consumption. Renewable energy initiatives that the UAE have pursued drove the investment recommendations made in this analysis.
UAE’s economy has seen extreme growth in recent years, as seen by above average GDP and eight figure year-over-year trade surpluses since 2003. This economic boom is more impressive when considering the country’s strong push to alleviate its reliance on oil exports and diversify into other industries. Currently, profits from oil exports represent roughly 33% of the economy. Volatile oil prices, which heavily correlate to UAE profitability, are becoming less important to overall financial growth. Actions like this help to mitigate risk for potential investors and should make the UAE more attractive in the foreign investment arena.
Capital markets in the UAE are also modern and robust. They enjoy two stock exchanges, have implemented an extensive market oversight organization to protect the integrity of their markets, and have created several government-owned investment institutions to help foster investment diversification. The Emirates welcome new business, as they have established Free Trade Zones that offer many benefits to investors that set up operations within UAE borders. The UAE ranks number one among Arab countries in foreign investment and is considered a global business center for its constant pursuit of social, economic, and technological advancement.
Political reform has been prevalent in the UAE throughout history. The first federal constitution was established in 1971 that brought these seven Trucial States together to operate as one entity. Although the UAE has experienced some growing pains in transferring authority from individual states to a federal governing body, the political stability is high. The UAE has recently rolled out a detailed, objective action plan called “Vision 2021” to help them methodically reach their goal over having balanced power among state dictatorship and federal policy.
The UAE has seen massive growth in its economy, population, infrastructure, and energy consumption for many years. The citizens of the UAE emit more greenhouse gases per person than any other country, and because of its geographic location, nearly all of their buildings are air-conditioned and water is obtained through energy-intensive desalination plants. Because of the exponential increases in demand for electricity, the UAE has focused its efforts on developing renewable energy sources. Estimates currently project that the demand for domestic power will more than double by 2020, and the UAE is tackling these consumption hikes head-on. Abu Dhabi, the capital of the UAE, is aiming to obtain 7% of its energy from renewable sources by 2020 and is currently planning the construction of a zero-waste city that will rely solely on renewable energy sources. This renewable energy push poses significant foreign investment opportunities, as an already economically-thriving country aims to eliminate energy reliance in parallel with having world-leading economic growth.