According to the International Monetary Fund, the persistent or constantly increasing growth in the UAE is due to its liberal and noninterventionist economic policies. The Government has a strong focus over these issues which are providing benefits to the UAE economy. The UAE’s GDP (measured in 2000) mounted by 7. 4% just in 4 years to reach Dh 323. 6 billion. Due to continuous diversification from oil and gas industries to non oil and the gas sector, finally, the UAE has succeeded in non oil and gas sectors as well.
The share of non oil based industries in making the GDP of the UAE has been increased to 72% due to economic reform around 230 billion Dhs which was just 9. 2% before. (Inflation in GCC to ease IMF UAE, n. p. ) The UAE is a member of Gulf Cooperation Council (GCC) and participates in the activities that focus on the betterment of economic issues. The UAE takes part in activities like consultation, development and improvement of policies that covers trading, investment, banking, finance, transportation, communication and other technical, social, financial and political areas.
Financial Sector The over all revenue position of the UAE has been increased from 22. 6 to 31. 4 which was mainly dependent on oil and gas sector. As the resultant the share holder company profit increased from 2. 9 percent to 13. 3 percent which clearly shows that the experiment of reforms was successful with reference to revenue generation. In the revenue generation, the second important factor is the balance of payment; likewise due to the policy, the balance of payment shifted to negative balance increased of about 8.
2 percent then it is surpluses as 32 percent of over all payment. (Inflation in GCC to ease IMF UAE, n. p. ) Currently, the UAE is on the peak of World Bank Financial governance effectiveness table with a score of 86. 1 followed by Oman and Qatar. This rating is based on long term policies. For that reason the stock market position of the country has became so strong due to the heavy investment made by foreign buyers. The long term stability of the financial market reflected the over all employment ratio of the UAE. The employment ratio of the UAE which was just 7.
9 percent in 1984 has become 86. 8 percent in 2007. The basic reasons behind that boost was highly stabled risk factor, comparative markets, long term policies, highly funded stocks and foreign investments. With respect to foreign investments one thing that is quite interesting is that the total ratio of Foreign investment was about 21. 3 percent in 1995, which was mainly in oil and gas sector but after becoming the free port; foreign investment came but in different sectors like real estate, chemicals, fertilizers and energy sectors.
Another record breaking event was the opening of DIFX (Dubai International Financial Exchange). This exchange is the main source of finances in the UAE. For a foreign investor this exchange has almost everything that is desired. The stock market mechanism of the UAE is almost the same as DOW or NYSE. The over all trading volume is about 125. 35 billion Dhs. In the market the main key player is the service industries other minorities are Oil and gas with 29 percent and then tourism. There are two major factors that can affect stock positions.
First one is the investment sector and the second one is the import sector. In 2005, DFIF has launched 3 special modules of security. These modules prevent any back crushing stock volumes, premature investment blockage and aggregation of stock fundamental. Another important factor of business development in the UAE is DFIX who has the honor of having the first cross border stock exchange due to which heavy foreign investment flow in and out easily. As a matter of fact, DIFX has the honor that it is listed in top 10 world exchanges.
It currently deals with in equities, bonds, funds, Islamic products, index products and derivatives. In short, we can say that the DIFX role in business development of the UAE is quite significant. The role of stock markets in the UAE has become more significant after the current scenario of financial positions of risk. The current risk status for business development in the UAE has become 56 percent lower than 1999. The ratio analysis of any business development in the UAE is mainly emphasized on public in place of private due to major steps taken by DIFX to prevent any locking status.
(CIA – The World Factbook, n. p. ) A bank is an asset for any financial activity. Due to heavy volume of foreign payments the banking values have been changed from 83. 11 percent to 40 percent, as a resultant the investment banking portion in the UAE banking system is much stronger than consumer banking. It mainly comprises of loans for heavy industries that’s why investment banking has much more edge than consumer banking in the UAE. It makes it easier to start establishing a new business in the UAE.