Estudios económicos
United Arab Emirates

United Arab Emirates

Population 10.4 million
GDP 39,709 US$
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major macro economic indicators

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 0.5 1.7 1.6 -3.5
Inflation (yearly average, %) 2.0 3.1 -1.5 1.2
Budget balance (% GDP) -1.4 1.2 -1.6 -2.8
Current account balance (% GDP) 7.3 9.1 9.0 7.1
Public debt (% GDP) 20.0 19.1 20.1 20.3

(e): Estimate. (f): Forecast.


  • Relatively diversified economy compared to its Gulf neighbours
  • Trade hub of the region
  • Political stability
  • Stable currency with the peg to the dollar
  • Expo 2020 and fiscal stimulus support growth


  • Uncertainty about the period aftermath of Expo 2020
  • Dependence of export and fiscal revenues on oil
  • Vulnerability of Dubai to the debt-laden government related enterprises
  • Slow increase in domestic demand


Expo 2020 and non-oil growth compensate low oil prices’ impact on growth

Continuously low oil prices represent a drag on the UAE’s economic growth. Although OPEC+ countries are likely to expand their agreement about cutting oil supply beyond the current March 2020 expiry date, crude prices are not expected to record a strong increase in the next quarters. This trend will weigh on the UAE’s oil production and its overall growth performance, as oil accounts for nearly 30% of GDP. On the other hand, the non-oil sector is expected to continue taking advantage of the accommodative fiscal policy, although its growth pace might slow down, as indicated by Emirates NBD purchasing managers’ index (PMI), which averaged 52.6 points in Q3 2019, nearly a seven-year low. Higher international arrivals for Dubai Expo 2020 are also expected to support non-oil growth. Dubai Expo, which will run from October 2020 to April 2021, is expected to attract 25 million visitors, with 70% from outside the UAE. Although this can be seen as an optimistic estimation, even a partial realization would contribute to the growth of the retail, transport and tourism sectors. This temporary boost will support local employment, which in turn is expected to sustain private demand. A more expansive monetary policy, as the UAE central bank is following the US Fed’s footsteps due to the currency peg regime, will also support domestic demand. Moreover, the improving business environment will continue to attract foreign investments. The United Arab Emirates received USD 30.4 billion in foreign direct investment (FDI) between 2016 and 2018, equivalent to 2-2.5% of GDP, according to the World Investment Report 2019 released by the United Nations Conference on Trade and Development. Abu Dhabi’s USD 13.6 billion economic diversification program, announced in late 2018, would also increase the opportunities for new investments. Despite this positive outlook, some challenges persist. Indeed, activity in the construction sector can be weakened, as preparations for the Expo 2020 are ending. The real estate sector is already suffering from falling prices (estimated to around 35% since the peak in mid-2014) and chronic over supply. The end of the Expo 2020 can result in serious overcapacities in certain sectors.


Budget deficit to widen to several-year high, hit by fall in oil exports

Lower oil prices caused a return to a fiscal deficit in 2019, and this trend is expected to continue in 2020 on the back of fiscal stimulus. Nearly half of fiscal revenues come from oil. As a result, the bearish expectations about oil prices, due to a slower global growth coupled with lower oil production will widen the UAE’s budget deficit, despite the approval of a zero-deficit federal budget in late 2019. However, the level of public deficit being low, and as investors see the robust wealth fund of Abu Dhabi as an implicit guarantee of repayment, the country will not face serious problems in raising funds to finance its fiscal deficit. Yet, Dubai’s public sector debt (wider than the general government’s) poses a challenge. The Emirate’s large Government Related Enterprises (GREs) carry a combined debt equivalent to nearly 70% of Dubai’s GDP and 20% of UAE’s GDP. Any sharper-than-expected downturn in global economy, or a severe slowdown on the real estate market, would push Dubai’s debt to GDP ratio upwards, as it would oblige the government to take over part of the GREs’ debt. Nevertheless, those risks seem quite mitigated for now. The UAE’s net international investment position is estimated by the IMF at 149% of GDP as of the end of 2017. The central bank’s foreign assets, which stand above USD 100 billion (equivalent of around 4 months of imports), considerable assets within Abu Dhabi’s sovereign wealth fund, and a large current account surplus will continue to offer solid financial buffers to the country. Having said that, hydrocarbon prices will continue to play a key role on export revenues.


Political stability expected to remain intact

The UAE is a federation of seven emirates, and is one of the most politically stable countries in the Middle East region. The Federal Supreme Council is composed by seven Emirs and elects the President. The cabinet is appointed by the Federal Supreme Council and is led by the Prime Minister. Currently, Khalifa bin Zayed al-Nahyan is the President of the UAE and the Emir of Abu Dhabi, while Mohammed bin Rashid al-Maktoum is the Vice-President and Prime Minister of the UAE, and the ruler of Dubai. The level of transparency remains low despite some efforts. The well-developed social benefit system is largely built on heavily oil-funded public spending. Domestic opposition is negligible. Strong relations with the US strengthen the country’s position in the region. Qatar and Iran can be seen as the UAE’s rivals, yet the risk of confrontation remains quite low. The UAE, together with Saudi Arabia and other mostly Sunni Arab States, began air strikes in Yemen in 2015. However, the UAE has been withdrawing its troops from Yemen since July 2019.


Last update: May 2020


The most common methods of payment in the United Arab Emirates (UAE) are cash, credit and debit cards, Open Accounts, Letters of Credit, Documentary Collections, and cheques.

Cheques are the most common and preferred method of payment in the country, especially in commercial transactions, as there are no costs involved with issuing cheques, unlike transactions that are backed by a Letter of Credit or any other type of a bank guarantee. Cheques constitute a reliable debt recognition title that may be enforced directly before a judge. In addition, UAE criminal law states that a person who delivers a cheque in bad faith without sufficient consideration may be imprisoned.

Until 2016, post-dated cheques were considered the best protection against late payments, and were frequently used in the UAE as guarantees, as bounced cheques are considered as a criminal offence. The new law is silent regarding Non-Sufficient Funds (NFS) cheques, and only states in Article 32 that all the legal proceedings, procedures, and execution procedures against the debtor’s assets shall be suspended once a decision is initiated until the ratification of the scheme of composition. Composition is defined in Article 5 of the new law as proceedings aiming to assist the debtor to reach a settlement with creditors pursuant to a scheme of composition under the supervision of the court, and with the help of a trustee to be appointed in accordance with the provisions of this law. In light of the above, any claims or legal proceedings filed against the debtor – whether related to NSF cheques or another instrument (this also applies to criminal proceedings relating to NSF or bounced cheques) – will be suspended once the court has accepted the debtor’s application for the aforementioned prevented composition. It worth noting that any claim related to an NSF cheque will be treated in the same way as any other unsecured claim which may be filed against the debtor.

UAE banks are part of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is used when transferring money between banks, particularly for international wire transfers.


Amicable phase

Debt collection begins with the amicable approach, during which the debtor receives a notice for payment, followed by a phone call from the creditor or an agency, with the goal of reaching a payment agreement.


Legal proceedings

The UAE Courts are comprised of:

  • the Court of First Instance;
  • the Court of Appeals;
  • the Abu Dhabi Supreme Court.

Located in each Emirate, courts of first instance have general jurisdiction and include a Civil Court, a Criminal Court and a Shariah Court. Following a judgement from one of these courts, the concerned parties have the right to appeal to the Court of Appeals on factual and/or legal grounds. Following this, aggrieved parties have the right to appeal to the Supreme Court on matters of law only. Shariah Court handles civil matters between Muslims.


Fast-track proceedings

An order of payment is a procedure where a party applies to the courts for summary judgment against a defendant for commercial debts, substantiated by a valid but unpaid commercial instrument such as a bill of exchange, promissory note or cheque. If a defence is filed, the dispute must be solved via an ordinary lawsuit before the court of first instance.


Ordinary proceedings

Proceedings start by filing a plaint (complaint) in the relevant court. It must meet procedural requirements, and include both the debtor’s information and the details of the debt. The court issues a summons to be served to the defendant, which includes an endorsed hearing date.

Once an answer has been filed by the debtor, the trial process is adjourned to allow the creditor to respond. Further adjournments are given so that memoranda can be submitted by both parties. Once the court believes that the case has been sufficiently pleaded, it reserves the matter for judgment. The entire proceeding is based on written submission supported by documentary evidence. The court will issue remedies in the form of specific actions and compensatory damages. Injunctive relief is not generally available and attachment orders are difficult to obtain.

Enforcement of a Legal Decision

A court judgment becomes enforceable once it is finalised. If the debtor fails to comply with the court’s decision, the creditor may request enforcement mechanisms before the judge, such as an attachment order, or even the imprisonment of the debtor.

Any foreign awards must first be recognized as a domestic judgment. When bilateral or multilateral reciprocal recognition and enforcement treaties exist, this requirement is simply a formality. In the absence of such agreements, an exequatur procedure is provided by domestic private international law.

Insolvency Proceedings

On September 4, 2016, the final draft of the Federal Law on Bankruptcy was approved. The new insolvency law proposes three new insolvency procedures:


Financial Reorganization Procedure

An out of court, private conciliation process that is applicable to entities who have not yet formally entered the zone of insolvency, which has the aim of achieving a consensual, private settlement between parties. An independent mediator with bankruptcy expertise is appointed by the commission for a period of up to four months to oversee discussions between the debtor and its creditors.


Protective Composition Procedure (PCP)

A debtor that is (a) experiencing financial difficulties, but is not yet insolvent; or (b) has been in a state of over-indebtedness or cessation of payments for less than 45 days, proposes a compromise with its creditors outside of formal bankruptcy proceedings. The PCP includes a moratorium on creditor action (including enforcement of secured claims) and places the debtor under the control of an office holder appointed from the Commission’s (the government agency that has the authority to oversee the insolvency proceedings) roll of experts, for an initial observation period of up to three months.

Other key tools of the PCP process include the ability to raise debtor-in-possession (DIP)-style priority funding, which may be secured on unsecured assets or take priority over existing security, and ipso facto previsions that prevent the invocation of insolvency-linked contractual termination provisions – provided the debtor performs its executor obligations. The debtor is given time to file a plan, which is then voted on by creditors.



The procedure is split into two elements:

  • a rescue process within formal bankruptcy proceedings, which is procedurally similar to the PCP (including an automatic moratorium and the ability to raise DIP funding);
  • a formal liquidation procedure.
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