Ekonomske analize
United Arab Emirates

United Arab Emirates

Population 10.7 million
GDP 39,180 US$
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major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 1.2 1.7 -6.1 3.1
Inflation (yearly average, %) 3.1 -1.9 -1.5 1.3
Budget balance (% GDP) 1.9 -0.8 -9.9 -5.0
Current account balance (% GDP) 9.6 8.4 1.8 2.0
Public debt (% GDP) 20.9 27.3 36.9 38.2

(e): Estimate (f): Forecast


  • Regional trading hub
  • Higher degree of economic diversification compared to its neighbors
  • Political stability
  • Vast financial assets of Abu Dhabi
  • New investment opportunities related to the normalization with Israel


  • Weak oil prices weigh on growth performance
  • Subdued outlook for non-oil activity
  • Increasing debt, fiscal revenues mostly depend on hydrocarbons
  • Lower tourism revenues due to COVID-19
  • Rising regional tensions


The Dubai Expo and the recovery in oil prices will support growth

The United Arab Emirates’ (UAE) economy was hit in 2020 by lower oil prices, OPEC+ production cuts and the negative impacts of the coronavirus. Oil revenues (around 30% of GDP) sharply declined as crude oil production fell to 2.4 million barrels per day (b/d) in October 2020 compared to 3.1 million b/d in end-2019. In 2021, recovering hydrocarbon prices and improving global trade volumes will sustain growth. Private consumption is expected to support growth on the back of the implemented fiscal stimulus (around 3% of GDP) and improved consumer sentiment thanks to the positive news on potential vaccines against COVID-19. Low interest rates (the central bank cut its rates by 125 basis points in 2020, following the U.S. Federal Reserve’s moves), coupled with the central bank’s monetary stimulus package equivalent to 20% of GDP, will also help private consumption. Dubai Expo, which will be held from October 2021 onwards and will run for six months, may attract less than the 11 million visitors expected because of the pandemic’s conditions. Nevertheless, the event would increase employment and reinforce consumer spending. A gradual easing of travel bans and an improvement in the transport and tourism sectors will also support the growth performance. The ongoing economic diversification programs will keep the UAE as an attractive investment destination for international companies. The recovery in investment will be mild due to COVID-19 and the termination of most of the Expo-related investments. The decline in the expatriate population will continue being a drag on real estate prices, which will continue to fall in 2021, for the fourth consecutive year, because of over-supply. The recovery in the non-oil sector will be gradual due to the slow recovery in trading activity in line with the weak global growth performance, the second wave of lockdown measures and restrictive fiscal spending.


Borrowing rather than tapping into reserves

In 2019, the UAE approved a zero-deficit federal budget for 2020, but COVID-19 changed the spending plans and the budget deficit approached 10% of GDP in 2020. In 2021, the deficit is expected to persist due to the continuous need for fiscal stimulus in the economy, as the pandemic’s conditions will probably not disappear quickly. Due to the rising debt, the government has mostly prioritized measures such as reducing various government fees and charges, deferral of some payments and cancellation of certain fines, instead of large material assistance. Oil prices, which are estimated to stand below the UAE’s fiscal break-even price (estimated at USD 66.5 in 2021), will still weigh on fiscal revenues (40% of which come from hydrocarbons) and make them more volatile. However, the VAT collection, in line with the recovery of private consumption, will have a positive impact. The public debt is expected to be funded mostly by tapping into the international capital markets, on Abu Dhabi preference, instead of using the vast cash reserves. Indeed, the central bank’s gross international reserves stood at USD 98 billion as of September 2020 and the foreign assets in the country’s sovereign wealth fund are estimated at USD 743 billion (around 200% of GDP) according to the IIF. In 2018, the federal government passed a law allowing the government to issue sovereign debt. Therefore, new bond issuances are expected in 2021.


The slight recovery in oil prices, the gradual loosening of the OPEC+ production cuts and rising global demand will support the UAE’s hydrocarbon exports, which still account for a third of total goods exports. The economic diversification strategy, which is based on tourism, construction and transport, among other sectors such as services and manufacturing, will continue to sustain import demand for capital goods. The recovery in consumer spending will also increase consumer goods imports. In 2021, the economic recovery and the expected increase in activity in the tourism sector and infrastructure projects may increase the need for foreign labor, which will in turn raise the level of outward remittances. Thus, the current account balance will continue to remain in surplus, but at a lower level compared to previous periods.


Political stability intact amid rising regional tensions

The UAE are expected to maintain their political stability despite continuous tensions i.e. with Iran, Qatar blockade, turmoil in Yemen, economic and political deadlock in Lebanon, etc. The normalization of the relations with Israel is expected to pave the way to reciprocal investments particularly in the energy, agri-food, tourism, and ICT sectors. A further drop in oil prices may represent a challenge, as social order is mostly maintained through social spending and increasing the living standards through public employment. Such a situation could force the government to reduce spending and increase taxes, which both increase the risk of upsetting the society. However, this risk remains low thanks to its ample financial reserves.


Last updated: April 2021


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.
Recent Update to Bankruptcy Law:
  • Various changes announced on 22 October 2020, but yet to be published in the official gazette. 
  • Key change – New Concept: “Emergency Financial Crisis” (EFC), which is defined as: “A general situation that affects trade or investment in the country, such as a pandemic, natural or environmental disaster, war, etc.”
  • New provisions changing the Bankruptcy Law during an EFC.
  • UAE Cabinet to determine when an EFC exists and it has yet to do so. It would appear that a UAE Cabinet decision is required before parties can rely on the new provisions;
  • If an EFC is announced, the new law provides certain protections for debtors, including:
    • Debtors not required to file for bankruptcy if he has failed to pay his debts within 30 days due to EFC;
    • Debtors can still file for bankruptcy during EFC and court may elect not to appoint a trustee in the proceedings if debtor proves the disruption to his business was caused by the EFC;
    • Creditors cannot file as the court will not accept bankruptcy applications against any debtors during the EFC.
Settlement with creditors (only applies to debtor filings):
  • If bankruptcy is accepted by court, the debtor may request 40 business days to negotiate settlement with his creditors. If approved by the court, it shall be published and include an invitation to creditors to negotiate settlement within 20 business days;
  • Settlement period offered to creditors shall not exceed 12 months;
  • If settlement reached with creditors with 2/3rds of the debt, it shall be binding on all creditors (even those who did not participate);
  • Settlement negotiations must be in writing and approved by the court.
Existing Bankruptcy Proceedings
  • Bankruptcy proceedings filed prior to the declaration of an EFC will continue, although the court can double the time periods set under the Bankruptcy Law.
Directors’ Liability
  • During an EFC directors may pay unpaid salaries of employees (excluding allowances pay rises and other contingent payments), without incurring any liability.
New Money
  • Debtor may obtain new financing (secured and unsecured) during an EFC with court approval. This will have priority over existing debts.
Other changes - suspension of legal proceedings
  • Amendments provide for an end date of the suspension of legal proceedings that did not previously exist under Articles 32 and 162 of the Bankruptcy Law.
  • Proceedings shall be suspended until (i) the ratification of the restructuring plan; or (ii) the lapse of ten months from the date of commencement of the bankruptcy / preventive composition.
  • The Court may extend this period by an additional four months.
  • Secured creditors may apply to the Court to grant them an exception to the suspension of proceedings so that they can enforce their rights.