A long-term plan for a stronger UAE economy

Eid Mubarak.

It has been difficult this year to find topics on the economy or business to be positive about. For Eid Al Adha I feel that a more optimistic article is called for. So let us look to the future and to what might be.

One happy future is having oil prices to return to US$100+ and remain there. That would have an immense positive effect on the economy. But then that isn’t looking to the future. With, among many other factors, shale oil production costs dropping and Iran increasing output capacity, this isn’t an optimistic future. It is a fantasy.

I, however, believe that we can have an optimistic future without the need for massive oil price increases. I am not saying that it is an easy path but it is a realistic one. It consists of bringing together a host of solutions and interweaving them into a single integrated plan for the economy. You will recognise individual ideas that I have discussed in detail already. Now it’s time to put these pieces together into a plan.
How can our economy grow? Our population is too small to replace oil and related income with consumer spending. That basically leaves exports. In 2014, the UAE’s non-oil trade balance was a deficit of Dh564 billion – that is, we imported Dh564bn more than we exported, excluding oil. If we are spending more than we are earning then we are going in the wrong direction. How can we reverse this? There are two sides to this equation: decrease imports and increase exports.
I am a firm believer in free market capitalism, although I do believe there has to be some social responsibility applied either voluntarily by the private sector or enforced via regulation. Therefore trade barriers are not a desirable solution to the issue of decreasing imports. Free market capitalism is about having an even playing field.