Usama Rehan Khan
4650578 | TBS905
-------------------------------------------------
A Comparative Analysis of UAE and France Economies
Submitted to: DR. Asima Shiraz
Usama Rehan Khan
4650578 | TBS905
-------------------------------------------------
A Comparative Analysis of UAE and France Economies
Submitted to: DR. Asima Shiraz
Contents
Abstract 2
Introduction to UAE Economy 2
Introduction to French Economy 2
GDP (Gross Domestic Product) 3
Components of GDP 4
Consumption 4
Private Investments 4
Government Expenditures 5
Net Exports 6
Unemployment 7
Inflation 8
Exchange Rate 8
Critical Analysis of Economies 10
France 10
United Arab Emirate 11
Like other economies UAE was hit by global financial crises in 2009 resulted in tight international credit and deflated asset prices. The authorities tries to overcome the crises by increasing spending and liquidity in the banking sector. Dubai was hit hardest during global crises, which led to depressed real estate prices. In December 2009 Dubai was injected with $ 10 billion loan by Abu Dhabi and emirates. The UAE’s future plan focuses on diversification and creating opportunities for nationals through quality education and private sector employment.
Introduction to French Economy
The economy of France is diversified. Most of large firms have been privatized completely or partially by the government including Air France, France telecom, Renault and Thales. However the government has control over some sectors like Power public transport and defense industries. The tourism industry of France is third largest in the world with at least 81 million foreign tourist per year. The real GDP of France stood still in 2012 and 2013. Unemployment rate has increased to 10.2% in 2013 from 7.8% in 2008; however youth unemployment has diminished from 25.4% in 2012 to 22.8% in 2013. The budget deficit increased to 7.5% of GDP in 2009 from 3.3% of GDP in 2008 before improving to 4.1% of GDP in 2013. Economy witnessed the 3.3% decline in 2007 to 7.5% in two years after that. French President Hollande has given the model for the employee support. Despite of the difficult conditions in France, it is still an attractive place for the investors because of liquidity of French bonds.
GDP (Gross Domestic Product)
GDP is the value of all final goods and services produced with in a country in a given period of time. It is the significant indicator of economy which reflects the picture of economy and where it stands.
Components of GDP:
GDP=C+I+G+(X-M)
C = Consumption
I = Investment
G = Government expenditure
X = Exports
M = Imports
According to World Factbook CIA UAE is high GDP growth and an open economy with trade surplus. Over the past years UAE has achieved diversification which resulted in the reduction of dependency on oil and gas to 25%.
The graph above shows the comparison of GDP growth between UAE and France Economy. The UAE economy has witnessed its growth on peak in 2006 with the growth rate of 9.8%. Perhaps like other economies UAE was also hit by global crises and dropped the GDP to -4.8% in 2009. In can be clearly seen that the economy has started becoming stable and reached to 4.4% in 2012, the average growth rate of economy from 2004 to 2012 is 3.99%. As Dubai has won World Expo 2020 the GDP will grow further in near future.
On the other hand if we see the graph, France economy shows more stagnant growth rate as compared to UAE economy with the average growth rate of 1.6%. Like UAE economy the France economy has also affected by global financial crises and dropped to -3.15% but they recovered quickly and grew as shown in the graph.
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