‘Dubai Economic Report 2018’ confirms emirate on track as financial, business hub
The Department of Economic Development, DED, announced the release of the ‘Dubai Economic Report 2018’ on Saturday.
The report reviews the major macro- and sectoral level economic developments and growth in the emirate during 2017. It aims to be a reference for public and private sector decision-making as well as for developing policies and strategies that enhance overall competitiveness and growth in Dubai and the UAE.
Dubai had gross domestic product, GDP, of AED389.4 billion in 2017, a growth of 2.8 percent in constant prices from AED378.8 billion recorded in 2016, whereas the UAE economy as a whole achieved a lower growth of 0.8 percent, says the report highlighting the importance of Dubai’s diverse production base in enabling the emirate to contain the impact of lower oil prices as well as unfavourable economic conditions elsewhere in the region.
Dubai’s Trade Openness index of 321 percent (the value of exports, imports and re-exports attributed to GDP) shows that the emirate ranks fourth in the world and first among Gulf and Arab nations. The emirate also ranked fourth among the world’s most visited cities in 2017, attracting 15.8 million visitors an annual increase of 6.7 percent. Together, the visitors spent AED109 billion in Dubai.
Sami Al Qamzi, Director-General of DED, said, “The ‘Dubai Economic Report 2018’ confirms that Dubai’s economy is firmly on its ambitious path towards excellence and establishing its position as a financial and business hub, regionally as well as internationally. Economic policies being adopted by the government to stimulate diverse economic activities, increasing openness to the world and a developing network of regional and global partnerships are all contributing to accelerating investment inflows to Dubai.”
Al Qamzi credited Dubai’s remarkable economic success to the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, and the leadership of H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, all of which have been translated into the the Dubai 2021 Plan to mobilise all capabilities and resources towards the sustainable development of Dubai.
“Given the existing regional economic and political climate and its impact on economic activity in Dubai and the UAE, the ‘Dubai Economic Report 2018’ reinforces that the strategic initiatives launched by Dubai over the past two years, such as the Smart City, Innovation Strategy and Islamic Economy, as well as the infrastructure projects being implemented ahead of the Expo Dubai 2020, have sustained growth in Dubai. Likewise, the initiatives launched by the Government of Dubai in April 2018 to accelerate business growth and improve the business environment have also helped to consolidate Dubai’s leadership globally,” Al Qamzi said.
Highlighting the cooperation between DED and other government entities in Dubai, particularly the Dubai Statistics Centre, Dubai Customs, Dubai Tourism, Department of Finance, Dubai Land Department, in issuing the economic report Al Qamzi said it reflects the vision of the leadership in promoting institutional integration within the government.
According to the report, Dubai has set a record in Islamic banking, with a total nominal value of AED217.33 billion in sukuk listings, the highest value of such listings anywhere in the world. The transport and storage sector was the second largest contributor to Dubai’s GDP in 2017 accounting for 11.8 percent while information and communications technology, ICT, contributed 4.1 percent.
The World Economic Forum’s Global Competitiveness Report (2017-2018) of the World Economic Forum, ranked the UAE first in the world in government procurement for high-tech products and first in the Arab countries for “creative capacity”. The ICT sector is an attraction for foreign direct investment (FDI), which doubled from 2007 to reach AED22.08 billion in 2016. Granting freehold and 5-10 year residence visas for investors and their families have been strong catalysts to FDI inflow into ICT.
Dubai adopted an expansionary fiscal policy, particularly in 2017 and 2018, increasing public spending on infrastructure projects and other investment initiatives as part of the preparations for the Expo 2020. As a result, budget deficit is expected to rise to about 1.5 percent of GDP by the end of 2018, still a lower percentage compared to the internationally recommended limit of three percent.
The growth in real GDP in Dubai has been accompanied by a low inflation rate of 2.1 percent in 2017, compared to 2.91 percent in 2016. The declining inflation is due to the decline in the price increase in several sectors, including housing as well as utility charges, from 4.5 percent in 2016 to 0.9 percent in 2017.
All main sectors of GDP recorded real growth rates in 2017 in Dubai, with the exception of value-added financial services, compared to 2016. The tourism sector, represented by hotels and restaurants, lead from the front, followed by real estate activities, with growth rates of eight percent and 7.3 percent, respectively. The construction sector grew 3.5 percent recovering from a -3.4 percent contraction in 2016.
The total value of Dubai’s non-oil commodity trade reached AED1.3 trillion in 2017. This value reflects a slight increase of two percent over 2016 and a remarkable recovery after two successive years of decline due in large part to weak demand in neighbouring countries. The value of foreign trade continued to rise in the first half of 2018 with a significant increase of 14 percent in the value of re-exports compared to the same period of 2017.
Dubai’s trade with its top four trading partners – China, India, the United States and Saudi Arabia – accounted for about a third of the total trade. China was Dubai’s largest trading partner for the second consecutive year, followed by India, which has been Dubai’s largest trading partner for many years. Dubai’s trade with GCC countries reached AED127 billion, an increase of about 10 percent, in 2017. Re-exports accounted for 53 percent of Dubai’s total trade with other GCC countries.
The report also refers to the growing role of tourism in sustaining economic development in Dubai. Tourism is among the most important activities in Dubai and the sector grew eight percent in 2017, compared to 2.5 percent in 2016, and contributed five percent of the GDP of Dubai. Tourism is also expected to grow further ahead of Expo 2020 and particularly during the six-month exhibition period, from October 2020 to April 2021. More than 270,000 new jobs are expected to be added in different sectors as a result of the Expo and allied activities, with a major share of the jobs coming from the hotels and restaurants.
Around 62 percent of the world’s retail brands are present in Dubai and presently, the emirate is ahead of Shanghai, London, Abu Dhabi and Paris as a destination for shoppers looking for luxury brands.
Expo 2020 Dubai is expected to attract around 25 million visitors, 70 percent of who will be from abroad. The retail, tourism and real estate sectors are expected to receive the lion’s share of the financial benefits from the Expo. While e-commerce poses a challenge for conventional shopping and retail activities in the emirate, especially the smaller players, the expected increase in the number of tourists from middle-income countries will invigorate shopping in Dubai.
Sector-wise, banking, insurance and capital markets was the third largest contributor to Dubai’s GDP in 2017, with an added value of AED40.5 billion, or 10.1 percent of the total. Established in 2004, the Dubai International Financial Centre (DIFC) is strategically located midway between the global financial centres like London and New York in the West, and Singapore and Hong Kong in the East. DIFC was ranked 15th among 110 financial centres worldwide in 2018, after being 18th in 2016.
Dubai and the UAE ranks higher than many of the developed countries in transport infrastructure quality and 2017 was no different. Dubai has also grown to be one of the largest real estate markets in the world and real estate activities accounted for 7.1 percent of GDP in 2017.
Dubai’s industrial sector is dominated by mining and quarrying, electricity, gas and water, and manufacturing activities. In terms of value, the output of the mining and quarrying industries sector in the emirate at constant prices reached about AED 6.7 billion in 2017. The sector has been on a decline in the last four years and its GDP contribution declined from two percent in 2014 to 1.7 percent in 2017. The decline in global demand for energy products since 2014 as well as the decline in conventional energy sources in Dubai has contributed to the decline in domestic production and exports.
The total production of electricity and gas has more than doubled during the 2009-2017 period. The value added by the sector at constant prices amounted to AED10.2 billion in 2017, an increase of 4.6 percent over 2016, and its contribution to GDP increased from 1.5 percent to 2.5 percent in 2017.
Manufacturing output (at constant prices) reached AED 36.8 billion dirhams in 2017, an increase of two percent over 2016 and the contribution of the sector to GDP reached 9.4 percent. Manufacturing also remains key to employment in Dubai. The Dubai Industrial strategy 2030, currently in its second year, aims to enhance the global competitiveness of the industrial sector and making it a strong engine of economic growth. The strategy focuses on transforming industry in Dubai into innovation-based, locally more favourable, environmentally friendly, and compliant with Islamic standards and halal principles to contribute to achieving Dubai’s goal as the Capital of Islamic Economy
Dubai’s healthcare and education sector have also seen significant improvement in infrastructure and capabilities as a result of the emphasis given to social and economic development across strategic plans. Public and private schools provide quality education to women and men and as a result, illiteracy remains at a negligible percentage. About 25,000 people worked in Dubai’s education sector as of 2016, while nearly 22,000 worked in the health sector.
It highlights the impact of emerging technologies across various sectors of the economy including the future of finance, real estate, consulting, healthcare, software, venture capital, manufacturing, public services, and retail. The summit will also discuss best ways to keep pace with the latest advances in technology and highlight the existing opportunities to develop multi-billion dollar projects and develop new markets and sectors.