Dubai is expected to record an economic growth of 3.1% this year, while it is projected to accelerate to 3.4% in 2022, spurred by the hosting of Expo 2020, said the Department of Economic Development (DED) said in its latest economic outlook.
Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council of Dubai said: “The bright outlook for growth in the emirate has been made possible by the vision and leadership of Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, under whose guidance the government undertook decisive measures to ease the repercussions of global challenges on the economy.
“These efforts were accompanied by new legislation and amendments to the investment and residence laws in the country. Cumulatively, these moves revitalised the economy and stimulated a strong flow of local and foreign investment, allowing the emirate to resume its journey of development, diversification and sustainable economic growth. Over the coming years, Dubai promises to be an even bigger global destination for investment and talent and a city that offers exciting new opportunities for businesses, entrepreneurs and innovators.”
Sami Al Qamzi, Director General of Dubai Economy said: “Dubai’s latest economic indicators show that the precautionary measures, comprehensive vaccination campaigns, stimulus packages, and legislative amendments that the UAE and Dubai have adopted were right on target. Dubai’s economy is now firmly on the recovery path and supported by increasing business and consumer confidence. This includes in particular business activities that were most negatively impacted by the pandemic such as tourism and transport.”
Al-Qamzi recalled the five consecutive stimulus packages that the Government of Dubai has launched during the period from March 2020 to September 2021, which contained a number of support measures, such as the suspension and reduction of various fees, reduction of customs duties, water and electricity bills, postponing rent payment, and cancelling fines. The total financial cost of the five packages amounted to AED7.1 billion ($1.93 billion), or 1.6% of Dubai's GDP.
Al Qamzi noted that despite setbacks to the global economy from pandemic-related developments, Dubai witnessed between September 2020 and July 2021 a relatively faster recovery in sectors such as transport and tourism compared to other countries.
DED expects that the accommodation and food services sector will grow by 8.5% in 2021, compared to 2020, and transport, storage and communications by 4.1%, reflecting the gradual recovery expected until the end of 2021 in tourism and transport activities. The wholesale and retail trade sector is also expected to regain a large part of its activity following the Covid-19-induced slowdown, achieving a growth of 4.7% in 2021, while construction activity is likely to decline in 2021 by 2% as a result of stabilization in the construction of residential, office, and hotel space, and a relative decline in construction related to infrastructure following their rapid growth recorded in the years before 2020.
Al Qamzi pointed out that growth is expected to accelerate in 2022 and reach 3.4%, driven by the continuous recovery of activities that were most affected by the pandemic, such as tourism and international transport, which will also benefit from Expo 2020 activities in the first months of 2022.
Economic growth of 1% in Q1 2021 from Q4 2020 signals start of recovery phase
The economic performance report issued by Dubai Statistics Center indicates that Dubai’s economy achieved a growth of 1% during Q1 2021, compared to Q4 2020, based on preliminary estimates of the seasonally-adjusted GDP data.
This growth is driven by the outstanding performance of the manufacturing sector, the improvement in tourism, transport and storage activities, in addition to the significant growth in the financial sector’s performance for the same period.
Aref Al Muhairi, Executive Director of Dubai Statistics Center, explained that Dubai’s economy contracted by 3.7% in Q1 2021 compared to Q1 2020. Nonetheless, this contraction points to a positive development in view of the performance back during 2020 when the contraction reached 10.9%, compared to 2019.
Al Muhairi indicated that despite the decline in certain activities in Q1 2021, others, especially those of high strategic significance, witnessed strong growth. This is most evident in the trade sector, which contributes close to 24% to Dubai’s GDP, whose growth reached 2.8% in Q1 2021, compared to the corresponding period in 2020. The trade sector was one of the leading sectors whose contribution to economic activity has lessened the economic impact of Covid-19.
Dubai foreign trade data issued by Dubai Customs indicate that non-oil foreign trade grew in Q1 2021 by 10%, reaching AED354.4 billion, compared to AED323 billion in Q1 2020. Exports achieved a significant growth of 25%, reaching AED50.5 billion, and the value of imports increased by 9%, to reach AED204.8 billion, while the value of re-exports increased by 5.5%, to reach AED99 billion.
The financial and insurance activities also achieved a growth rate of 3.5% in Q1 2021, compared to Q1 2020, and their contribution to the emirate’s GDP rose to reach 12.8%. It is also one of the sectors that contributed to reducing the impact of Covid-19 on economic performance. This performance resulted from the growth of total deposits and loans during Q1 2021, as loans grew by 2.6% and deposit balances grew by 3.3%, while interest rates on loans decreased by 24% and on deposits by 35%.
Moreover, activities in the manufacturing industry also witnessed a growth of 3.2%, and their contribution to the overall economic performance increased to 9.5%. Consequently, it was one of the activities that contributed to reducing the impact of the global economic decline on the emirate’s economy. The activities of the food industry, pharmaceutical products, rubber and plastic products, and base metals manufacturing contributed to the growth of the manufacturing sector positively.
Real estate activities also achieved a growth rate of 2.4% during Q1 2021, compared to Q1 2020, contributing to 8.7% of the real GDP. Consequently, it was one of the supporting activities to overcome the effects of the global economic decline and its consequences on the Emirate's economy. The real estate sector in Dubai achieved a significant growth in sales transactions in Q1 2021, compared to Q1 2020 and 2019 before the outbreak of the epidemic.
The Dubai Statistics Center report indicates that during Q1 2021, the Covid-19 pandemic affected the accommodation and food services, transport and storage sectors. Both activities decreased by 25.6%, compared to Q1 2020. This decline is considered normal under global economic circumstances, it added. – TradeArabia News Service