Advances in Economics and Business Vol. 4(5), pp. 208 - 221
DOI: 10.13189/aeb.2016.040502
Reprint (PDF) (400Kb)


Economic Indicators in United Arab Emirates: Assessing the Sustainability of the Country's Economic Performance


Ghassan Ossman *
School of Business Administration, Al Dar University College, United Arab Emirates

ABSTRACT

The study determines the influence of indicators of economic growth in the United Arab Emirates to assess the sustainability of the country's economic performance. It focuses on three economic indicators; rates of unemployment, inflation, and population growth and their influence on the UAE economic performance sustainability, and determines how strongly these three variables can predict such sustainability. The study identifies both a significant difference in the level of UAE economic performance in the past ten years and the long-run, as well as the independence of economic indicators from sustainability of economic performance of the nation. Findings of the study show that decline in inflation rates of the national economy fosters financial stability and inflation rates remained low within acceptable levels in the previous years and will continue to maintain stability in the next future period, five to ten years. The country is projected to witness population growth as the nation becomes a preferred destination for living, promising job opportunities, and local and foreign investments. UAE economy is experiencing growth in economic performance and expected to maintain stability in the coming years with the government efforts to achieve long-term development objectives for year 2021. Stability remains the hallmark of the nation economic activity with a continuous focus on infrastructure projects as growth of various industries, improvements in real estate industry, tourism, and rising growth in economic performance will allow UAE to achieve sustainability in economic performance. Correlation analysis reveals that the variable of unemployment rates has no significant influence on economic performance sustainability which implies that, for the last ten years, the country experienced economic growth and was not influenced by variations in unemployment levels. Similarly, the variable of inflation rates shows no significant influence on economic performance at both 5% and 10% significance level which implies that, for the last ten years, the country experienced economic growth and was not influenced by variations in inflation rates in the country. T-test shows significant relationship between population growth rates and economic performance sustainability at 5% level of significance, a change in the level of population growth will lead to changes in the level of economic performance sustainability. The correlation coefficient of -0.631 reveals high negative correlation between population growth and economic performance sustainability which indicates that increases in population growth over the last ten years in the country, has led to decreases in economic performance sustainability. The T-test analysis for significant difference of UAE economic performance in the last ten years and over the long-run result in acceptance of the null hypothesis indicates that the two periods are just the same. The rising trend of UAE economic performance in the past ten years will continue over the long-run. Economic indicators variables; unemployment, inflation, and population growth rates are positively related and strong predictors of economic performance sustainability. Chi-Square Test of Independence results in acceptance of null hypothesis. Economic indicators and sustainability of economic performance are not independent of each other which implies that changes in the rates of economic indicators variables of unemployment, inflation, and population growth will cause a change in the sustainability of economic performance. Recommendations of the study include the conduct of further studies focusing on variables not included in the study that are likely to influence the level of economic performance, monitor the level of population growth which is significantly correlated with economic performance, develop other economic models that will determine an increase in a nation's economic performance and achieve sustainability in the long-run, and the formulation of economic policies and strategies to overcome significant long-term challenges on oil dependence, growing expatriate workforce, and inflationary pressures.

KEYWORDS
Economic Performance, Unemployment, Inflation, Population Growth

Cite this paper
Ghassan Ossman . "Economic Indicators in United Arab Emirates: Assessing the Sustainability of the Country's Economic Performance." Advances in Economics and Business 4.5 (2016) 208 - 221. doi: 10.13189/aeb.2016.040502.