The UAE has typically been a country which has benefitted from extracting and selling its ample oil supplies, which has led to it becoming incredibly wealthy as a result. Now, however, the UAE is looking to diversify its economy away from purely oil based, and is exploring other areas in which it could excel. Here are some of the ways the UAE may be affected by this.
Collapsing Oil Prices
The huge collapse in oil prices due to a massive global oversupply has been well documented, and has been one of the main reasons UAE countries are pursuing alternative economic strategies. It was just a few years ago that oil was more than $100 per barrel, but it plummeted to below $30 per barrel at the start of 2016.
Now that the UAE's oil is worth far less compared to what it once was, there is more reason for the country to invest in new areas and change its own economic landscape. Those involved with markets like forex and share trading may well notice changes in the markets based in this area, with more potential volatility arising in certain stocks (especially for oil companies) and the dirham.
Skills and Knowledge Based Economy
It is likely that the government will want to utilise the skills and knowledge of its citizens in order to drive forward economic growth. This may mean investing in education and training facilities in order to accommodate for the shift, and could well take stimulate a growth in SMEs and startups.
Manufacturing may also become a key industry in the region, and it is already Dubai's third largest sector. The country may well see an increase in innovations in this area, and it could be one of the most hi tech sectors.
Since the shift from oil to other industries, Nasser Saidi, formerly chief economist of the Dubai International Financial Centre, has called for more foreign ownership and greater privatisation in the UAE.
Foreign ownership could well serve to finance many new projects in the area, and potentially help the nation achieve its overall vision for the economy. It may also help to bring in new companies to the area, who may help to boost economic growth and create a more diverse range of new services and businesses. Once this has been achieved, the oil industry in the country may well be scaled down to reflect a lower level of reliance on it.
Diversifying the UAE economy away from oil is likely to have many positive impacts, not least because of the relatively low prices of the fossil fuel. It may take some time to change their oil reliant economic model, but the UAE is sure to make significant progress in the coming years.