Its economy, previously based on fishing and pearling, was transformed by the discovery of oil in the 1950s and 60s. The discovery also transformed the lives of its citizens, who have gone from a traditional nomadic Bedouin lifestyle to living in some of the most modern cities in the world. Most buildings in the UAE are less than 30 years old.

The UAE has the world’s sixth-largest reserves of oil. Hydrocarbons are the mainstay of the economy, accounting for 38.4 per cent of gross domestic product (GDP) in 2011. In the same year, production averaged 3.3 million barrels a day.

About 94 per cent of the UAE’s oil reserves belong to Abu Dhabi. As a consequence, Abu Dhabi is by far the largest economy in the UAE, accounting for about 60 per cent of GDP, followed by Dubai at 30 per cent and Sharjah with 6 per cent. Consequently, Abu Dhabi also shoulders the burden of the federal budget, covering 30-40 per cent of state spending. Dubai contributes about 3 per cent, with the remainder provided by income from federal bodies. In 2011, GDP totalled $338.6bn, according to the UAE’s National Bureau of Statistics. The Washington-based IMF puts the figure at $341bn.

At current production levels, the UAE’s oil reserves will last for about 90 years. The federal government is aware of this and diversification has long been high on its agenda. Most of the emirates have drawn up a vision for development that focuses on expanding the non-oil economy. Dubai’s plan is based on growing its services and tourism industries and maintaining its position as a global transportation hub. Abu Dhabi’s plan aims to make the emirate a world leader in petrochemicals production and renewable technologies, as well as a regional centre for culture.

During the oil and credit booms of 2003-08, the economies of the emirates expanded rapidly and their governments ploughed billions of dollars into ambitious real estate and industrial schemes. Property prices in the UAE soared as short-term investors flooded the market.

This economic boom was brought to heel by the global financial crisis of 2008-09. Dubai, which had built its economic model on real estate development, was especially hit as property prices crashed amid a global credit crunch. Real estate projects were cancelled or put on hold as developers could no longer afford to continue their work. This in turn triggered redundancies and an economic slump from which the emirate is still recovering.

On 25 November 2009, state-owned holding company Dubai World shocked global financial markets with the announcement that it would be asking creditors for a standstill on about $27bn-worth of debt as its property arm, Nakheel, struggled to meet its obligations. Nakheel is responsible for the series of man-made islands that have extended Dubai’s coastline. On 14 December, the government of Abu Dhabi came forwards with a $10bn Dubai Financial Support Fund to prevent a debt default. Nearly three years later, Dubai’s economy is firmly on the road to recovery, although property prices remain low and oversupply continues to be a concern. Dubai World has successfully completed a series of restructurings and the emirate has benefited from the political turmoil elsewhere in the region, offering a safe haven for tourists and investors.

It is now Abu Dhabi, which previously appeared impervious to the global financial crisis, that is experiencing challenges. The government began scaling back its investment plans in mid-2011 and is revising down the population growth forecasts on which its 2030 vision for economic development is based. Nonetheless, expectations for growth in the UAE are still strong. The IMF predicts GDP will rise 4 per cent in 2012 and 2.6 per cent in 2013. This compares with 4.2 per cent growth in 2011 and 2.2 per cent growth in 2010.

People & culture

Population estimates for the UAE vary greatly. The country’s National Bureau of Statistics put the figure at 8.3 million in 2010, the last year for which it estimated figures, while international sources such as the Washington-based IMF say there are about 5.5 million people living in the UAE in 2012. Expatriate workers make up about 88.5 per cent of the population. Until the financial crisis struck, the population had been growing at 5 per cent a year due to the large number of expatriates arriving in the country.

Arabic is the official language of the UAE, although English is more commonly spoken. Despite nationals being a minority in the country, it is important that foreigners wishing to do business in the UAE understand the traditional manners and customs.

When you first meet a UAE client, you should not immediately begin to discuss business matters. Usually, tea will be served, followed by coffee. Occasionally, considerable time will be spent exchanging courtesies. The key to successful negotiations is trust and you may be requested to return on a second, third or even fourth occasion. Ultimately, a national’s word is considered a bond. Courtesy may inhibit a firm no, but it is rare for a national to back down from an agreement.

When you first meet a UAE client, you should not immediately start discussing business

The notion of wasta (power and influence) still holds strong in the UAE. That means if you have the right connections or family background you can get things done. Personalities play a significant role in business, as does understanding the subtle influences present in individual markets and maintaining a steady physical commitment to the UAE.

The national dress is a symbol of identity worn by nearly all locals. Most men wear the white ankle-length shirt or dishdasha and a white or sometimes red-chequered head cloth or gutra, with a black coil or agal to hold it in place. Under this they wear a skull cap or taqia. Sheikhs also wear a cloak with gold braid. UAE women wear a black cloak or abaya and a headscarf or shayla.

Islam is the official religion of the UAE and is widely practised. Most Emiratis are Sunni Muslims. The Islamic holy day is Friday. Other religions are tolerated in the federation and there are several churches and Hindu and Sikh temples.