Much like the majority of wealthy economies around the world, the UAE economy has taken a serious hit as a result of the COVID-19 pandemic, with a projected GDP drop of 6% in 2020, worse than initial figures had predicted. Much of this has been attributed to the UAE’s dependence on oil and energy exports, a market that has been decimated by the pandemic.
In addition, the UAE is a highly globalized economy that is vulnerable to shocks in global value chains, as well as being a country that depends heavily on tourism revenues. While the UAE economy growth rate is predicted to pick up in the year ahead, this is not guaranteed.
Key to the long-term growth of the UAE will be its degree of success in diversifying and strengthening the post-pandemic foundations of the economy. If you are wondering what the future of the UAE economy might look like, read on to find out what current trends are telling us.
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1. The UAE Economy of Knowledge
One of the most significant changes underway in the economy of the UAE in 2020 and beyond is the government-led transition to a so-called knowledge economy. The government has invested significantly in the UAE’s higher education sector in a bid to attract tens of thousands of students, academics, and professors to the country in the next few years.
This, in turn, aims to position the UAE as a regional leader in the knowledge economy. Significant investments have also been made into high-growth knowledge sectors such as AI, robotics, and electric vehicles. In a post-pandemic economy, these growing sectors will become increasingly vital to the economy of the UAE.
2. A Dynamic Environment for SMEs and Entrepreneurs
When looking t the UAE economy by sector, one crucial change that is currently taking place is the shift in the structure of the wider economy towards SMEs. Just a couple of decades ago, the state was by far the largest employer in the UAE, with a few massive state-owned conglomerates making up the bulk of employment.
However, SMEs now make up around 53% of the economy of the UAE. In its efforts to transition to a post-oil, post-pandemic economy, the state is also doing more to fuel the private sector growth of SMEs and attract entrepreneurs to the region.
For example, the recently-formed Etihad Credit Insurance, run by Massimo Falcioni, has been private sector underwriting and financing on generous terms for smaller enterprises that wish to thrive in the UAE. Meanwhile, the investor and entrepreneur vias schemes have undergone massive expansion in recent years, allowing long-term and even permanent citizenship for innovators who wish to make the UAE their home.
3. Attracting Wealthy Retirees
Finally, it is worth highlighting a key pillar in the UAE’s economic transition: the bid to attract wealthy retirees. With year-round sunshine, excellent medical care, and high quality of life, the UAE has a lot to offer retirees with big bank accounts.
In efforts to attract big-spending retirees, the UAE is rolling out revised retirement visas that offer a renewable 5-year residency for any retirees, provided that they have at least 1 million AED in savings or an active income of 20,000 AED per month. As long as you fit one of these criteria, you can retire in the UAE.
Stay On Top of the Trends That Matter in a Changing World
Understanding the trends that are driving change in the UAE economy is just one piece of a wider puzzle. To stay on top of the key trends that matter in the post-COVID world, we offer cutting-edge insights on the economy, culture, science, and politics.