Benefiting from its political stability in a tumultuous region, the United Arab Emirates (UAE) has shown a certain resilience with regards to the falling oil prices. Economic growth reached a healthy 3% of GDP in 2015, even if this represents a decline compared to the 2014 rate. However, the situation of each Emirate is very different. The country's GDP is dominated by the economic strength of Abu Dhabi (60%), especially its hydrocarbon production and majority control of all savings management. Dubai contributes a quarter of the country's GDP and functions as the commercial platform of the Emirates, especially with its well developed port and airport infrastructure. Economic growth of the UAE is expected to accelerate slightly throughout 2016. In the long term, the country's economy should receive an additional boost from its hosting of the World Expo 2020.
The healthy banking sector and rising tourism revenues have helped soften the impact of falling oil prices, which reflects the economic diversification of the UAE. However, since 2015, the UAE has faced a significant deficit due to the decline in oil revenues. The authorities have initiated a series of measures such as the reform of energy subsidies, which includes a deregulation of domestic oil prices and an increase in tariffs for electricity and water. Additional fiscal measures are under consideration, such as the introduction of business taxation and the 2018 VAT. The Government of Abu Dhabi, whose revenues were most affected by the low oil prices, has prioritised investment projects, while Dubai is attempting to stimulate activity through investments related to the preparation of Expo 2020 (especially the extension of the urban transport network). In line with the three-year development plan for 2014-2016, the 2016 budget (AED 48.5 billion, a slight decrease compared to 2015) allocates the majority of funds to social spending, especially focusing on education, healthcare and housing. The needs of citizens and infrastructure are essential to the fulfilment of the UAE Vision 2021. The somewhat smaller budget reflects attempts by the Government to cut spending in the face of declining oil revenues.
Although Dubai's debt has been successfully restructured, the threat of a new real estate bubble and overcapacity remains present. Abu Dhabi is focusing on diversifying its economy and developing alternative energy sources. In 2017, it is expected to launch a fleet of nuclear power plants and massively invest in renewable energies (the "Masdar" project costing USD 22 billion). It still needs to implement more rigorous guidelines for the banking and real estate sector in order to avoid cyclical crises. Because it is aware of the finite nature of its oil resources, the UAE has launched a policy of economic diversification in order to reduce its dependency on hydrocarbons and guarantee a more balanced distribution of wealth. The strategy pursued involves taking advantage of the complementarity between the different Emirates. While Abu Dhabi has taken the lead in economic diversification, Dubai is primarily trying to develop its tourism sector.
The UAE has one of the highest per capita income levels in the world and a highly developed welfare system. It also has one of the lowest rates of unemployment in the Middle East (4.5%) and depends heavily on foreign labour (more than 85% of the workforce). A policy of "Emiratisation" has been launched to encourage employment of the local workforce.