UAE

The UAE is located in the southeastern part of the Arabian Peninsula, facing the Persian Gulf to the north and bordered by Saudi Arabia to the south and Oman to the east. With an area of 83,600 km², the country consists of seven emirates: Abu Dhabi (the capital), Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah, and Ras Al Khaimah. The population of the UAE, as of 2023, is estimated at 9.4 million people, with a significant percentage of foreign workers making up over 80% of the labor force. Dubai, the commercial and tourist hub of the country, has a population of 3.5 million, while Abu Dhabi has about 1.5 million residents.

Economic Situation

In 2023, the UAE’s GDP is estimated at $478 billion, with a growth rate of 3.5% compared to the previous year. The GDP per capita is $51,000, placing the country among the richest in the world. Oil and natural gas exports are the backbone of the economy, contributing 30% of GDP, while the non-oil sector, including tourism, logistics, and financial services, is rapidly growing.

Exports were $225 billion, while imports reached $180 billion, creating a significant trade surplus. The unemployment rate remains low at around 2.5%, thanks to economic diversification and the attraction of global talent. In 2023, inflation increased by 3.8%, driven by higher food and housing costs, but is expected to stabilize in 2024. Fiscal policies remain prudent, with a minimal public deficit thanks to high revenues from natural resources and commercial activities.

Forecasts

For 2024, GDP growth is projected at 3.7%, supported by investments in infrastructure and global events such as Expo 2020, postponed to the end of 2021 and concluded in March 2022, and the World Climate Summit (COP28) scheduled for 2023. Inflation is expected to be around 3.5%, with unemployment remaining stable.

Country Risk

The UAE presents a moderate-to-high country risk, sustained by political stability and a favorable business environment. However, reliance on oil exports, regional tensions, and climate change represents potential long-term economic stability threats.

Foreign Direct Investments

In 2022, FDI in the UAE reached approximately $20 billion, with strong inflows into technology, financial, and tourism sectors. The main investors come from India, the United States, and the United Kingdom. Economic liberalization policies and the creation of free zones have incentivized foreign investor interest.

Geopolitical Analysis

Role in the Gulf Area and Arab World

The UAE plays a crucial role in the Middle Eastern geopolitics, thanks to its economic and political stability and strategic position in the Persian Gulf. Abu Dhabi, the largest emirate, is a key player in the Gulf Cooperation Council (GCC) and has maintained strong relations with the United States and other Western countries, while also seeking to strengthen ties with Asian powers, particularly China and India.

Relations with the West and the United States

The UAE is considered a strategic ally of the United States in the region, participating actively in military operations and cooperating in security and intelligence matters. However, the growing assertiveness of China and Russia in the region has pushed the UAE to diversify its alliances and expand economic and political ties with these countries, creating a complex dynamic in international relations.

Regional Tensions and Security Policies

Tensions with Iran, due to ideological differences and geopolitical rivalry, remain a concern for the UAE. The presence of U.S. military bases and growing cooperation with Israel, following the Abraham Accords of 2020, are part of the UAE’s strategy to ensure national security and maintain a balance of power in the region.

Economic Developments and Future Projects

The UAE is investing in economic diversification projects, aiming to reduce its dependence on oil through innovation, tourism, and renewable energy. The government’s 2071 Plan aims to position the UAE as a global leader in technology and sustainability. The upcoming COP28 Climate Conference in Dubai presents an opportunity for the country to demonstrate its commitment to sustainability and attract international investment.

Geopolitical Challenges

The UAE faces significant challenges, including climate change, which poses a direct threat to water resources and food security. Growing pressure to adopt more sustainable environmental policies is pushing the government to balance economic development with environmental protection. Additionally, global tensions, such as those related to the war in Ukraine, affect the energy market and trade dynamics, forcing the UAE to remain agile and adaptable.

Oman

The Sultanate of Oman is located in the Middle East, in the southeastern part of the Arabian Peninsula. It shares borders with the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The country is bordered by the Arabian Sea to the southeast and the Gulf of Oman to the northeast. Covering an area of approximately 309,500 square kilometers, Oman boasts a coastline stretching over 2,000 kilometers. The capital city, Muscat, situated on the northern coast, serves as the nation’s political and economic hub. As of 2023, Oman’s population stands at 4.5 million, with nearly 40% consisting of expatriates. Arabic is the official language, while English is widely used as a second language. Islam is the predominant religion, with the majority of the population adhering to the Ibadi sect, a distinctive feature of Oman compared to other Muslim-majority countries in the region.

Economic Overview

Oman’s economy is in transition, with diversification efforts underway but still heavily reliant on the oil and gas sector, which accounts for approximately 60% of GDP and 80% of exports.

• Nominal GDP (2023): $95 billion.
• Economic Growth (2023): 3.2%, driven by economic reforms and a modest increase in oil production.
• GDP per Capita: Around $21,000.

The main exports include oil, natural gas, petrochemical products, and metals. The government has initiated substantial reforms to diversify the economy, focusing on tourism, logistics, and renewable energy. Inflation remained moderate at 2.5% in 2023, while the unemployment rate stood at 6.8%, with youth unemployment being particularly high.

Forecasts

Under the leadership of Sultan Haitham bin Tariq Al Said, Oman has launched the “Vision 2040” plan to reduce oil dependency by expanding the non-oil sector, developing infrastructure, and improving education. Economic growth is projected at 3.5% annually for 2024–2025, supported by structural reforms and a stronger role for the private sector.

Geopolitical Analysis

Strategic Position

Oman occupies a critical location at the Strait of Hormuz, one of the world’s key chokepoints for global oil transit. This makes the country pivotal to international energy security and maritime route control in the Persian Gulf.

Regional Relations

Oman is renowned for its neutral and independent foreign policy, often acting as a mediator in regional tensions. It maintains balanced relations with both Saudi Arabia and Iran, carefully navigating its economic and strategic interests.

Relations with the West

Oman is a reliable ally of the United States and the United Kingdom, maintaining long-standing historical ties. The Omani armed forces collaborate closely with Western partners to ensure maritime security in the Strait of Hormuz. Muscat also hosts strategic military facilities used by the U.S. and NATO.

Role in Regional Conflicts

Oman has maintained neutrality in the Yemen conflict, facilitating negotiations and promoting dialogue between warring parties. This stance has earned Oman recognition as a valued diplomatic partner in a region fraught with deep divisions.

Global Economic Relations

In recent years, Oman has strengthened trade ties with China, its primary oil buyer, while simultaneously seeking investments from Gulf nations, India, and Europe to support its ambitious economic diversification goals.

Geopolitical and Economic Challenges

• Oil Dependency: Despite diversification efforts, Oman’s economy remains vulnerable to oil price fluctuations.
• Regional Competition: Oman faces growing economic competition from neighboring countries like the UAE and Saudi Arabia, which are heavily investing in similar sectors, such as tourism and logistics.
• Demographic Management: The high proportion of expatriate workers creates dependence on foreign labor, while the government is under pressure to generate opportunities for young Omanis.
• Climate Change: Oman is at risk from rising sea levels and extreme weather events, which could damage critical coastal infrastructure.

Oman positions itself as a stable and moderate country in the turbulent Middle East, with a pragmatic foreign policy that enhances its role as a regional mediator. Despite significant economic challenges, the government’s commitment to change through the Vision 2040 plan is evident. With its strategic location, balanced diplomacy, and infrastructure investments, Oman has the potential to emerge as a global economic and logistical hub. However, achieving these ambitions will depend on the country’s ability to implement structural reforms and attract long-term investments.