Dubai: The oil sector's contribution to Dubai's gross domestic product (GDP) has declined to 5.1 per cent last year compared to 5.4 per cent in 2005, according to a latest report by the Dubai Chamber of Commerce and Industry (DCCI).

Dubai accounts for 43 per cent of UAE non-oil GDP and 28 per cent of total GDP, the report said.

"Both the UAE and Dubai are growing with exceptional speed. Specifically, in 2006 Dubai non-oil GDP grew by 21 per cent and UAE non-oil GDP grew by 20 per cent. By looking at Dubai share in UAE non-oil GDP and its exceptional growth rate, we clearly infer that Dubai is still representing the key driving force of the UAE non-oil GDP," said the report e-mailed yesterday.


"With the exception of the oil sector, whose share in Dubai total GDP dropped from 5.4 per cent in 2005 to 5.1 per cent in 2006, the other non-oil components of Dubai GDP have maintained their shares in total GDP.

"In addition, they experienced exceptionally high nominal growth in 2006 with nearly all sectors growing at a faster rate than in 2005. In other words, the sectoral structure of Dubai non-oil GDP remained relatively unchanged with the wholesale retail trade and repairing services sector continuing to drive Dubai economy; in 2006 it contributed 22 per cent of Dubai nominal GDP having experienced growth rates of 16 per cent for the second year running."

Nominal growth in the manufacturing sector slowed by 12 per cent in 2006 compared with 2005's impressive 32 per cent nominal growth. Despite this fall, the manufacturing sector remains the second largest sector in Dubai economy generating 14 per cent of its total GDP.

The construction sector has grown impressively through 2006, with a 31 per cent year-on-year increase since 2005.

"As a result the construction sector is now an equivalent size to the transport, storage and communication sector, which has grown at a slightly slower rate, compared with rates in 2005 at 18 per cent as apposed to 20 per cent. Both sectors now individually generate 13 per cent of Dubai total GDP," it said.

The real estate and business services sector has also boomed over the past year, recording 31 per cent growth compared with 18 per cent in the previous year and as such has established itself as an integral driver of Dubai economy. The real estate and business services market now contributes to 11 per cent of Dubai nominal GDP compared with 10 per cent in 2005.

"Interestingly, high inflation rates in the real estate sector will dampen the real income the sector generates as some economists may argue. Nonetheless, the decision to set the rent increase by 7 per cent maximum in 2006 is supposed to mitigate this effect," the report said.


Growth rates in the fin-ancial services sector have also gained, increasing to 25 per cent nominal growth compared with 18 per cent in 2005.

Although, the sector is still small, contributing to only 10 per cent of Dubai nominal GDP, it shows no signs of slowing and therefore looks set to become an increasingly important driver of Dubai economy in the future, the DCCI report said.

Finally, the figures of 2006 show that Dubai economy is well diversified and continuing to grow, DCCI said.

"The economy looks to be moving seamlessly into the tertiary stages of development, creating itself as a business hub and services centre," it said.