There is no denying that for many regional economies, these are uncertain times. Strikes on oil tankers and airports highlight the unresolved nature of the conflict between Iran and the US, and its ripple effects. However, a look at how the UAE is planning its future in this environment is illuminating.
The country’s latest federal budget is a reminder that long-term economic ambitions cannot be put on hold every time the region faces a crisis. The decision to commit Dh292.5 billion ($79.64 billion) over the next three years is a serious statement of intent. Of particular note is its emphasis on social development, which has been earmarked as the largest area for spending.
Economic strength largely depends on the people who sustain it, particularly their education, skills, health and ability to participate in a changing economy. Investing in citizens is an essential part of the UAE’s long-term competitiveness and is recognition that its most valuable asset is its people. “Our priorities remain fixed and unchanged…” Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said on Monday. “Education, health, housing, social services, and the quality of life and stability of the citizen.”
Somewhat counterintuitively, despite the months of violent and dangerous conflict in the region, the UAE is confident in its future. This is borne out by some independent projections; a report on Monday by global advisory firm Boston Consulting Group suggested that wealth in the Emirates is set to jump to $6 trillion by the end of this decade. This reflects the Emirates’ enduring appeal to investors and its accumulation of assets. The country’s long policy of diversifying its economy beyond hydrocarbons has been supported by international capital and a reputation for stability.
Economic strength largely depends on the citizens and residents who sustain it
This is not to be complacent. The International Monetary Fund’s recent decision to downgrade its growth forecasts for regional economies highlights the seriousness of continuing challenges. Even countries with substantial financial reserves and diversified sources of income are not wholly immune from regional shocks of the magnitude being experienced right now.
The UAE’s budget can be best understood as an expression of ambition and an investment in resilience. The current regional turmoil actually supports the case for more medium and long-term planning. Funding resilience only when a crisis arrives is not the most effective strategy. It is the decisions that governments make today that will count when the chips are down. Long-term planning and strategic foresight are strengths of the UAE, and essential ingredients for its current and future success.