Surname 1

Name:

Professor:

Class:

Date of Submission:

United Arab Emirates: Unemployment, Inflation, and GDP

Introduction

The United Arab Emirates is found in the Middle East. It borders the Gulf of Oman and Oman

to the East. It shares its southern border with Saudi Arabia. It also shares maritime border with

Iran and Qatar. The country came into existence in 1971, and is made up of 7 emirates. They

include Abu Dhabi, the capital, Ajman, Fujairah, and Dubai. The United Arab Emirates is

strategically located along the Strait of Hormuz, an important point for world crude oil transit.

The country’s economy is an open market type. Thus, a free price system determines the charges

for goods and services. Three decades ago, the UAE was among the most poorly developed

countries in the world (Awad & Yussof 199). However, a lot of development has been achieved

in almost all areas, placing the country in the list of developed nations. In this paper, a summary

of unemployment, inflation, and GDP is presented.

Brief Literature Review

Inflation indicates soaring prices of basic goods and services. When the rate of inflation is high,

the standard of living deteriorates. Consumers’ purchasing power also decreases and the rate of

unemployment increases. However, moderate level of inflation is essential. It results to

reasonable levels of consumer spending and interest rates that promote investment. The success

of the United Arab Emirates has partly due to the effort by various regimes to plan for inflation

through relevant and effective policies.

 Surname 2

In measuring the rate of unemployment, the number of individuals that are in search of

jobs is expressed I terms of total labor force. When the rate of unemployment is high, the level

of consumers’ spending decreases. The GDP and housing markets among other areas are

negatively impacted as a result. The rate of employment in various countries including the

United Arab Emirates is used to show the health state of their labor market (Awad & Yussof

201). The GDP or gross domestic product is used to determine both the output and national

income for a given country based on its economy. It equals the total expenses incurred in

producing the sum of goods and services within a given country and in a given period of time.

Many of the Arab countries are faced with economic challenges that result from the slow pace of

implementing structural reforms. As a result, the ability of many of these countries to increase

their GDP growth has been limited.

Analysis

According to statistics provided by International Labor Organization, 80% of the total population

from aged 15 and above participated in the labor force in 2015. On average, the unemployment

rate stood at 3.8% in the year 2013, which is a significant decline compared to 4.0% rate

recorded in 2012 (Awad & Yussof 207). According to this estimates, the male unemployment

rate is lower than that of female, which in 2013 stood at 2.8% and 8.8% respectively. In 2011,

unemployment was 4.60.

Consumer prices have also experienced inflation over the last few years. According to the

National Bureau of Statistics, consumer prices’ index rate stood at 120.84 in 2014 and in 2013, it

was 118.07, which represents 2.33% increase. From 1990 until 2015, the average inflation rate

recorded in UAE is 2.26%. The highest rate to be recorded was 2.3 % in 2008 while the lowest

rate was o.88% in 2011. In June, last year, the rate of inflation was 4.2%. It rose by 0.1% the
 Surname 3

following month and was expected to converge to 5% by the end of that year (Awad & Yussof

210). In the years following financial crisis, the inflation rates indicates that the country’s

economy is stable.

From 1973 to 2013, the average UAE’s GDP value was $ 120.26. In 2014, the highest

ever value of $ 399.45 was recorded. However, this value decreased to $370.29 in 2015. Today,

the country’s GDP accounts for 0.60% of the world’s economy. National Bureau of Statistics

report indicates that before the financial crises, the GDP of the country exhibited an upward

trend. However, with the current slump in oil prices, this growth has considerably been slowed

down (“Economics Forecasts” par. 5). In terms of economic sectors, natural gas and crude oil

activities account for 34.3% of the GDP. Other important sectors include trade activities, real

estate, and manufacturing which account for 11.35, 10.3%, and 9% respectively.

Conclusions and Recommendations

Given the low unemployment rate in the UAE, it can be concluded that the country’s economy is

near full employment. However, in order to prevent any further rise in this rate, the government

should come up with better policies to stimulate economic growth. Moreover, focus should be

paced on reforming the education sector to ensure that citizens obtain the required skills that are

consistent with the demands in the labor market.

 Surname 4

Work Cited

Awad, Atif, and Ishak Yussof. "International trade and unemployment: evidence from selected

Arab countries." Middle East Development Journal 8.2 (2016): 198-229.

“Economics Forecasts”. "GDP in United Arab Emirates". Focus Economics, 2016,

http://www.focus-economics.com/country-indicator/united-arab-emirates/gdp-usd-bn.