Dubai: Expo 2020 in Dubai would boost the local economy by as much as 1 per cent — representing billions for the emirate, according to Andrew Scott, a professor of economics at the London Business School.
The government estimates 25 million tourists would visit Dubai for Expo 2020 if the emirate is successful in its bid. Business leaders from small and medium-sized enterprises (SMEs) to largescale companies have also previously told Gulf News that the economic benefit would help grow their operations.
Scott said hosting the event would boost gross domestic profit (GDP) by half a per cent in the lead up to and following the event. Another half per cent would be added during the Expo.
Scott, who said he is not a fan of large-scale sporting or expo events, said the event would be significant for Dubai.
On why he wasn’t a fan he said that “evidence shows clearly that countries lose money” and that tourism benefits were regularly overstated, pointing out the lower than expected visitors to the United Kingdom during the London 2012 Olympics.
There is also the economic drain — many countries are left with large-scale infrastructure that is not commercially viable.
Different story here
But according to the London-based economist it would be a different story for Dubai. Hosting Expo 2020 falls in the government’s strategy of placing Dubai on the world’s centre stage.
“Because Dubai wants so hard to position itself as a global and regional hub it makes a lot of sense for it to host something like the Expo,” Scott said.
Unlike other cities that have hosted international events, Dubai would not need to significantly invest in new developments.
Scott said the excess of infrastructure already in the market would encourage Dubai to use what they already had, reassuring for a recovering property market that is still scarred by the 2008/09 global financial crisis.
In recent months, Dubai has unveiled multi-billion dollar developments including the Mohammad Bin Rashid City and a $2 billion lagoon, and later this month Dubai’s newest airport — Al Maktoum International at Dubai World Central — will open to passenger traffic.
But despite the timing of these announcements, they don’t appear to be dependent on hosting the Expo.
“I don’t think these [recent] projects are assuming the Expo happens and I don’t think those projects justify Expo. They are about long-term growth of the economy,” Scott said.
While bullish on the prospects of the economy, Scott is cautious on a re-emergence of the Dubai bubble.
“This region is not frightened of substantial infrastructure investment and has to be prepared it will have excess capacity in its infrastructure,” Scott said.
Dubai has witnessed 20 per cent growth in property sales in 2013, far outstripping the local economy, which is growing at 4 to 5 per cent annually.
Last week, several leading local developers told Gulf News at Cityscape Global in Dubai that there was no bubble, instead the market performance was representative of a recovery.
Scott agrees that it’s too early to call it a bubble because the growth we’re witnessing is a recent occurrence. But the conditions are here, he said.
“We’re looking at dangerous territory if this carries on,” he said and added that “Dubai has a history of proving people wrong,” pointing at its achievements over the past 20 years.