Question

Please choose my country United Arab Emirates or Dubai since my professor knows I came from there.

Your job is to propose a macroeconomic policy for a foreign country of interest to you.

TASK #1: Select your country as follows: (1) If you were born in a foreign country, select that country; (2) If you were born in the U.S. but lived in a foreign country, select the foreign country you lived in the most time; (3) If you have never lived in a foreign country, select the foreign country you spent the most time visiting; (4) If you have never left the U.S., select the foreign country that most interests you. State why you selected the country that you selected on your assignment.

TASK #2: Identify and Assess Data. Identify and study recent data and trends in economic growth, unemployment, poverty, and inflation about your country.

Note: An excellent source for current data is the “Guide to Country Comparisons” on the CIA World Fact Book Website at:

https://www.cia.gov/library/publications/the-world-factbook/

TASK #3: Identify at least one recent macroeconomic news or magazine article concerning your country.

PRIMARY TASK: In 1-2 typed pages of your own words, based on the information you collected, 1) characterize the macroeconomic state and direction of your country, 2) Identify what you believe is the major macroeconomic challenge facing your country, and most importantly, 3) recommend a macroeconomic policy (fiscal, monetary, trade, systematic reform, or long-term growth) to the leaders of your country. Explain why your policy might help your country’s economy. Support your proposal with data and/or economic theory.

TASK #5: Appropriately cite your references, and include the online links your sources. At least two sources other than your textbook must be referenced.

Your assignment submission must not exceed 700 words, excluding references.

Answer 1

Answer:

As I am a citizen of United States Emirates and spent all of my life here until now, so I am going to choose U.A.E. as a country of interests.

Here is the data for economic growth, unemployment, poverty and inflation for UAE.

UAE	2012	2013	2014	2015	2016	2017
Economic Growth	6.8	4.7	3.1	3.8	3	2.9
Unemployment	4.1	4	4	3.8	3.7
Inflation Rate	0.7	1.1	2.4	4.1	1.6

Source: National Bureau of Statistics

While analyzing this data set gives us, a clear of macroeconomic trends about UAE.

Economic Growth by GDP rate is showing that maximum GDP rate achieved in last six year is 6.8 in 2012, and minimum GDP rate is 2.9 in 2017. It shows that growth rate is consistently declining since 2012 with the marginal increase in 2015 after 2014 by 0.7%.

Unemployment rate data is showing that there has not been a significant change since 2012 as it is nearly about four percent for all the financial years. Even though, unemployment rate is declining since 2012 with margins in each following financial year.   

Inflation rate data is showing a downward U shape curve with the maximum attained 4.1 in 2015. The lowest achieved inflation in this period is 0.7 in 2012.

Data for poverty analysis is not available for an UAE’s economy.

Macroeconomic Challenges: Over all macroeconomic direction of economy is good as it has low inflation rate and unemployment rate. The major concern should be the declining GDP growth rate. It is very low and consistently declining since 2012. The problem of declining GDP is more concerning as global oil prices are not likely to go up in near future which plays significant role in UAE’s economy. Political situation is also not very good in Middle East, which is also a problem as foreign investment may get come down.

A News Report in khaleejtimes (UAE projected growth in 2018) is discussing about the UAE projected growth for the next financial year 2018. News report by Institute of Chartered Accountants in England and Wales and Oxford economics says that the UAE will record an accelerated growth in 2018 to 3.6 per cent from 1.7 percent in 2017. Report also highlighted the recent comment made by International Monetary Fund about the same as “UAE Economy is on track to bounce back despite being slow expected growth rate of overall GCC”. Article also talked about the recent news as "now, women can drive in Saudi Arabia. These are the some form of economic diversification of the country because in future demand for auto industry may boost up.

Policy Suggestions: UAE needs some structural reform, which can diversify its revenue sources. As UAE is crude oil, export based economy and revenue genrated through it is a major source to finance its needs. However, this cannot be the case for long run. Recent decline in oil prices must be an alert to this oil exporting country. For a short run, government can introduced expansionary monetary policies, as inflation is not a big problem. It will certainly promote consumers to spend more on daily goods and services. This increase in demand for goods and services in economy will result as the rise in overall price. Rise in prices will ends with increase in profit for firms and corporate sectors. Now, firms are in better position to invest more on production process or in technological enhancement. This will help economy to come up with a higher growth rate.

References:

• https://www.khaleejtimes.com/business/economy/uae-economic-growth-set-to-double
• https://tradingeconomics.com/united-arab-emirates
• World bank website.