Economic policies adopted by the government all contributing to accelerating investment inflows to emirate
Dubai's gross domestic product growth expanded 2.8 per cent to Dh389.4 billion last year against Dh378.8 billion in the previous year on the back of stronger growth in key sectors, according to the Department of Economic Development's (DED) Dubai Economic Report 2018.
However, the UAE economy as a whole achieved a lower growth of 0.8 per cent last year, 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.
Natalia Tamirisa, the International Monetary Fund's mission chief for the UAE, had earlier forecast Dubai's GDP to grow 4.2 per cent in 2019 due to government infrastructure spending ahead of Expo 2020 compared to 3.4 per cent this year.
Dubai's Trade Openness index of 321 per cent - the value of exports, imports and re-exports attributed to GDP - showed that the emirate ranked 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 per cent. Together, the visitors spent Dh109 billion in Dubai.
Sami Al Qamzi, director-general of the DED, said 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."
According to the report, Dubai has set a record in Islamic banking, with a total nominal value of Dh217.33 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 per cent while information and communications technology contributed 4.1 per cent.
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 per cent of GDP by the end of 2018, still a lower percentage compared to the internationally recommended limit of 3 per cent.
The growth in real GDP in Dubai has been accompanied by a low inflation rate of 2.1 per cent in 2017, compared to 2.91 per cent 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 per cent in 2016 to 0.9 per cent 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 8 per cent and 7.3 per cent, respectively. The construction sector grew 3.5 per cent recovering from a -3.4 per cent contraction in 2016.
The total value of Dubai's non-oil commodity trade reached Dh1.3 trillion in 2017.
This value reflects a slight increase of 2 per cent 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 per cent 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 Dh127 billion, an increase of about 10 per cent, in 2017. Re-exports accounted for 53 per cent 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 8 per cent in 2017, compared to 2.5 per cent in 2016, and contributed 5 per cent of the GDP of Dubai.
The value added by the wholesale and retail trade was 26.6 per cent of GDP (in constant prices) in 2017.
Sector-wise, banking, insurance and capital markets was the third largest contributor to Dubai's GDP in 2017, with an added value of Dh40.5 billion, or 10.1 per cent of the total.
Dubai's industrial sector is dominated by mining and quarrying, electricity, gas & 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 Dh6.7 billion in 2017.
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 Dh10.2 billion in 2017, an increase of 4.6 per cent over 2016, and its contribution to GDP increased from 1.5 per cent 2.5 per cent in 2017.
Manufacturing output (at constant prices) reached Dh36.8 billion dirhams in 2017, an increase of 2 per cent over 2016 and the contribution of the sector to GDP reached 9.4 per cent. 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 the Islamic Economy.
About 25,000 people worked in Dubai's education sector as of 2016, while nearly 22,000 worked in the health sector.
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