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.
The report states that Dubai had a gross domestic product (GDP) of Dh389.4 billion in 2017, a growth of 2.8 per cent in constant prices from Dh378.8 billion recorded in 2016. The UAE economy grew at 0.8 per cent. Dubai’s Trade Openness index of 321 per cent (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, or an annual increase of 6.7 per cent. Together, the visitors spent Dh109 billion in Dubai.
Dubai Economic Report 2018 also 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,” said Sami Al Qamzi, Director-General of DED, adding that economic policies being adopted by the government to stimulate 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.
“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.
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 (ICT) 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 three 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 decreasing 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. 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 hotels and restaurants.
The construction sector grew 3.5 per cent recovering from a -3.4 per cent contraction in 2016. Real estate activities accounted for 7.1 per cent of GDP 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.
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, 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 output of the mining and quarrying industries sector in the emirate at constant prices reached about Dh6.7 billion in 2017. The sector has been on a decline in the last four years and its GDP contribution declined from 2 per cent in 2014 to 1.7 per cent 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 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 to 2.5 per cent in 2017.
Manufacturing output (at constant prices) reached Dh36.8 billion in 2017, an increase of 2 per cent over 2016 and the contribution of the sector to GDP reached 9.4 per cent.
Dubai’s health care 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.