Assessment Of Country Risk And Opportunities

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Assessment of Country Risk & Opportunities: UAE FIN 410-02 Carlos Chuquin, Bryan Lopez, Bailey Martz The UAE has one of the most diversified economies in the region. Abu Dhabi holds 90% of the Federation’s hydrocarbon reserves. A down side of that is that now the UAE is dependent on the revenues Abu Dhabi can obtain from the reserves. On the other hand, the service industry in Dubai has been booming, as Dubai has the 7th largest port in the world and has become the largest business center in the region. Additionally, there seems to be political stability across the Federation, which increases the chances of people doing business. There have been reports of the lack of transparency of para-public entities and businesses, which is something…show more content…
After the decrease on the price of oil, Abu Dhabi was the most affected, which made investing in the oil industry a priority in order to make the price of oil go back up. Additionally, the decline of the oil price caused the revenues to decrease, which created a public deficit for the country. The government, however, is dealing with the weak budget revenues well as it has implemented a reform of energy subsidies, deregulation of domestic hydrocarbon price, and finally, it has increased the price in electricity and water. In regards to the account balance, it will remain positive but its levels will be subpar compared to previous years. The opening of the Iranian market this year will be highly beneficial, as it will incentivize imports in both the oil and non-oil industry. Non-oil exports are 60% of the exports of Abu-Dhabi and Dubai. The increase of imports will lessen but it will remain stable, as the local currency, the Emirati Dirham is pegged to the U.S. dollar which appreciated this year. The beginning of the UAE’s central bank can be traced to the the UAE Currency Board, which was created in 1973 with the purpose of replacing the UAE’s former currency, the Qatari Riyal. During that period of time, the UAE Currency Board had no central banking powers, and its focus was on UAE’s currency, gold, and foreign exchange. All of that changed in 1980 when a law was passed, which dissolved the UAE currency and created The Central Bank of the United Arab
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