Emirate's economic activity strengthens ahead of Expo 2020 project
Dubai economy will grow faster in 2019 and 2020 on the back of strong growth in key sectors with GDP (gross domestic product) crossing Dh400 billion mark this year.
The emirate's preliminary economic growth slowed to 1.9 per cent last year but it will pick up this year to 3 per cent and will accelerate further in 2020 to 3.7 per cent, according to Emirates NBD Research. "[The growth is] underpinned by construction and real estate, business services, hotels and restaurants and transport and logistics sectors," said Khatija Haque, head of Mena Research at Emirates NBD. She pointed out that trade war escalation, slower global growth and soft consumer spending may pose risk to the emirate's growth in medium term.
According to the Central Bank of the UAE's forecast, the UAE economy will expand 2 per cent in 2019. The UAE GDP grew 2.2 per cent in the first-quarter of 2019. The country's GDP is projected to expand at the same rate in the second-quarter 2019, however, it will slow down in Q3 and Q4 to 2 per cent and 1.6 per cent, respectively.
Dubai Economy Tracker index by Emirates NBD has rebounded sharply year-to-date, reaching 58.5 in May, on stronger output and new order growth and sustained price discounting.
Dubai Statistics Centre (DSC) had said that the emirate's economy grew 1.94 per cent in 2018 to Dh398.13 billion, driven by an upswing in trade and infrastructure investments. The GDP is expected to reach Dh410 billion in 2019 following 3 per cent growth and Dh425 billion next year post 3.7 per cent growth.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, also sees economic activity strengthening in 2019 and 2020, up from the 2018 GDP growth level.
"Central to the recovery is the outlook for stronger investment activity, in part linked to greater project implementation to complete infrastructure and facilities ahead of Expo 2020 Dubai. The Expo itself, should then boost tourism inflows and related spending, including in hospitality services. However, we highlight the ongoing global uncertainties and have taken a cautious approach at this point on the external backdrop," Malik said.
Jihad Azour, director for Middle East and Central Asia at International Monetary Fund, recently said that Expo 2020-related spending would support economic growth in the near term.
Anish Mehta, vice-chairman of the Institute of Chartered Accountants of India (Dubai chapter), said the growth in Dubai will accelerate due to diversification into multiple economic activities unlike earlier where the economy was mainly driven by real estate and oil.
"Investment in infrastructure and technology will increase due to Expo 2020 Dubai, which are known as catalyst for economic, social and cultural transformation. Conscious efforts are also being made to attract more tourists," said Mehta.
Manjeet Singh Chhabra, managing director of credit rating agency CRIF UAE, expects Dubai to grow modestly through the rest of 2019 and growth will accelerate in the year 2020.
"The improved growth will be driven by spending related to Expo 2020, continued business confidence, strong government spending, and improved credit growth. The oil prices have climbed up in the last few days to geopolitical risks. However, headwinds from the weakness of the global expansion, the threat of trade wars, a disorderly Brexit and the fall in house prices remain," said Chhabra.
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