2. Analyzing the Business Cycle and
Contracyclical Policies in the UAE
Main points:
• Brief overview of the UAE
economy
• Definition of the business cycle
• Importance of understanding the
business cycle
• Introduction to contracyclical
policies
3.
4. Boom (1971-1982)
• Transformed the UAE's economy from a reliance
on fishing and pearling to a fossil fuel-driven
powerhouse.
• Rapid infrastructure development: Oil revenues
fueled significant
infrastructure development, including
airports, ports, roads, and communication
networks.
• Urbanization: Major cities like Dubai and Abu
Dhabi experienced rapid urbanization, attracting
businesses and foreign investment.
• Establishment of free zones: The creation of free
zones like Jebel Ali Free Zone further boosted
trade and investment.
• Rise of tourism: The UAE began to establish itself
as a major tourist destination, particularly Dubai
5. •Oil price decline: The global oil price crash in
1980s significantly impacted the UAE's
economy.
•Reduced government spending: Government
spending on infrastructure projects declined
due to lower oil revenues.
•Debt accumulation: The government
borrowed heavily to finance ongoing
projects, leading to debt accumulation.
•Economic diversification efforts: Recognizing
the vulnerability of an oil-based
economy, diversification efforts
began, focusing on sectors like
tourism, finance, and manufacturing
RECESSION(1983-1989
6. • Gulf War: The Gulf War in 1990-91 caused
significant economic damage to the
UAE, disrupting trade and tourism.
• Real estate crash: The war led to a real estate
bubble bursting, further impacting the
economy.
• Economic stagnation: The UAE faced a period
of economic stagnation with slow growth
and high unemployment.
Depression (1990-1991):
7. Recovery (1992-present):
• Economic reforms: The government implemented economic reforms, including
privatization, deregulation, and fiscal consolidation.
• Continued focus on diversification: Diversification efforts intensified, with the UAE focusing on
becoming a global hub for trade, finance, tourism, and logistics.
• Real estate boom: The UAE experienced a major real estate boom in the early 2000s, driven by
tourism and foreign investment.
• Financial crisis (2008): The global financial crisis of 2008 caused another economic downturn in
the UAE, particularly impacting the real estate sector.
• Economic resilience: The UAE displayed remarkable resilience during the crisis, recovering faster
than many other countries due to its diversified economy and strong government finances.
• Continued growth: The UAE has continued to experience economic growth in recent
years, driven by tourism, trade, and non-oil sectors.