The UAE Economic Indicators Analysis - Case Study Example

STUDENT NAME STUDENT NUMBER SEMESTER DUE DATE INTRODUCTION Economic indicators are economical statistical data of a macroeconomic measure, used by financial analysts to review the economic health of a state or future investment opportunities. Examples of economic indicators are the gross domestic product, Gross National Income, total imports and exports, Consumer Price Index (CPI). Economic indicators are vital information in scaling the movements of an economy [Cri03]. There are three categories of economic indicators. 1. Leading indicators which predict expected direction of the economy. 2. Coincident indicators this include the employment level and GDP of a specified economy. 3. Lagging indicators i.e. the GNP, unemployment rates the CPI and interest rates, only specified after economic activities occur. Economic indicator are computed variables with a specified schedule release date and month year, allowing interested parties to plan and strategize. Important to combine economic indicators when analyzing the performance of a state so as to glimpse into the style and pattern flows within multiple data set. In this report we provide a comprehensive insight into the economic performance of the UAE. With economic indicators being the key focus. The analysis involves, GDP Gross Domestic Product, Total exports and General average wages. MAIN ECONOMIC INDICATORS Gross Domestic Product is the total value of goods and services produced within a specified period (usually 1 year). Also can be calculated quarterly. Gross domestic product includes all privates’ final consumption and government final consumption [Dou94]. Formulae for GDP GDP = C+G+I+NX Where C=private consumption G = public spending I = sum of country investments NX=Nations total net exports calculated at (T.E-T. I) =NX. Important in evaluating the standard of people living within UAE. The formulae to compute GDP is universal within the world’s economy. Therefore, used to compare economic variables of different nations with high level of accuracy. In the year 2007, Gross domestic product was 150(thousands of dirhams). A high rate on private final consumption at92 with a relative lower rate on government final consumption of 10. Gross fixed capital formation was 36.UAE total net exports at 12, difference from the previous year 2006.The GDP for year 2006 equals to 160, government final consumption and private final consumption where similar from the previous year with a slight increase and decrease of 1 respectively. Gross fixed capital formation was quite low with a difference of 7. However total exports increased by 2 and total imports increased by 15, this is a key indicator of why the economy of 2006 GDP was high than that of the prior year 2007.resulting to an 8% decline in the rate if the UAE economy. CONSUMER PRICE INDEX. Consumer price index measures the changes in the prices in a fixed market basket of consumer goods and services commonly purchased by household overtime. Such as food and drinks. These UAE releases provide information of goods and services percentage change in consumer price index by division (all items). In the year 2016/2015 August all increase in the CPI at 0.55%. Textile, clothing and footwear was at 7.6% of the market share and so a % change of upton5.95% within the periods. This was a record highest figure within the division. Transportation at 9.9% market share losing to a -12.11 decrease as shown below in the table. Beverages and tobacco were relatively on the same level, with medical care, furniture and household good. Housing in the UAE observed as a major economic activity with a percentage market share of 39.3% a significant increase of 3.21% from August 2015 and July 2016. Table 2. CONSUMER PRICE INDEX BY DIVISION. (UAE) Division Weight August July August 2015 2016 2016 All items 100 127.19 128.25 127.89 food and soft drinks 13.9 146.11 147.74 148.65 Beverages and tobacco 0.2 150.28 150.34 150.42 Textiles, clothing and footwear 7.6 104.99 111.04 111.23 Housing 39.3 122.37 125.6 125.66 Furniture and household goods 4.2 134.84 135.37 134.85 Medical care 1.1 108.08 108.62 108.59 Transportation 9.9 135.82 123.98 119.37 Communication 6.9 98.83 98.67 98.71 Recreation and culture 3.1 116.51 116.39 116.42 Education 4 157.56 163.52 163.52 Restaurants and hotels 4.4 146.51 147.06 147.33 Miscellaneous goods and services 5.3 130.23 130.36 129.27 FISCAL POLICY AND MONETARY POLICY (UAE). The UAE fiscal policy aims at promoting high growth for national GDP. Resources and utility effective control are the main influences esp. oil). This has been the prime figure in diversify the economy and invest in various projects. UAE has invested in aviation and air transport. The UAE government involvement in capital supply of aviation indicated objectives towards national growth and rational self-interest. 1. Unemployment rates 2. Promoting high standards of living. 3. Stable prices. Implications. UAE is implementing the fiscal policy through two categorical Hands on (active) approach and hands off (free market) fiscal policy. Fiscal policy states that there must a government intervention to some degree for it to indeed be considered fiscal policy [Cri03]. High and sustainable growth, Dubai’s sovereign wealth fund finances and owns the Emirates Airline. Hands off policy motivated private firms and individual to take the lead and minimal government intervention. Augments suggesting that division of the economy from the nation would heed strong long-term economic objectives. Hand on approach is favorable for UAE high growth in the economic activity. Employment rates, Hands on approach assisted the UAE in using resources revenues gained by oil to incorporate funds in the aviation sector to meet requirements. Increasing need for skilled personnel, more pilots and electronic practitioners. Hands off approach is not favorable as in our case, due to population margin is tied to the state. Population are also dependent on governmental projects. Stable prices, price will increase in search for skilled labor, and material purchases. Hands on will cause inflation to increase and meet supply and demand. Implementation of new technologies [Dou94]. Hands on fiscal policy has put the UAE in a positive position of its economy. Employment rates are high with high levels of living standards prospective way in growth. The Hand on fiscal approach indicates a strong economic growth for the UAE in the future and a more stable growth. Table 3. Conclusion: The UAE central bank monitor and implement banking and monetary policies to facilitate the expansion and development on the economy. Ensure the nation’s economic activities are stabilized in price of goods and commodities. Improvised living standards and well established international trade economy. UAE has an established economy as stated in the evidence on the table and charts provided. Works Cited Cri03: , (Bell, 2003), Dou94: , (Gale, 1994), Read More