Dubai: Dubai's economy is shrugging off the impact of the global recession and is fast returning to the growth path, according to economists and bankers.
"We expect growth to return to positive territory as early as this year, and to become increasingly robust in the medium-term. Initially, the recovery will likely be led mainly by improved external balances, but domestic demand should begin to pick up more strongly next year on the back of more robust consumption," said Farouk Soussa, an economist with Citi Group.
In a report on the Dubai economy, Soussa has forecast 1.6 per cent growth in Dubai's gross domestic product this year and the economy is projected to expand 4.7 per cent in 2011 and 6.3 per cent in 2012.
"The main beneficiaries of this growth will likely be sectors related to external demand, tourism, trade, logistics, transportation, and to domestic consumption," he said. The International Monetary Fund said on May 25 that it expects Dubai's economy to shrink by about 0.5 per cent this year. However, IMF Middle East and Central Asia Director Masoud Ahmad told Gulf News in a recent interview that the IMF projections are anchored on a base case scenario.
"More clarity on Dubai's debt restructuring is going to have its upside on Dubai's growth prospects," he said. UBS, an investment bank, said in a report yesterday that it expects Dubai to return to growth next year, although the financial restructuring of some of the companies could be protracted. "Dubai's infrastructure is superior to that of regional peers, and competes with some of the world's most advanced cities," said Soussa.
Last week, Stephen King, chief economist at HSBC Holdings, said in Dubai that the emirate will recover relatively quickly due to rising oil prices and the good infrastructure.
On Monday, V. Shankar, CEO of Standard Chartered for Europe, Middle East, Africa and Americas, said Dubai's economy is set to emerge stronger after the restructuring of some corporates and the bank is comfortable with the risks of the restructuring process.
