Dubai economy grows 1.94% in 2018 driven by trade and infrastructure spending
Trade activities contributed 18% of the total growth achieved by the emirate in last year
Dubai's economy grew 1.94 per cent in 2018, driven by growth in trade and government investments in infrastructure, according to official government figures.
Trade activities rose by 1.3 per cent year-on-year, contributing 18.1 per cent of the total growth achieved by the emirate in 2018 to Dh398.13 billion. It accounted for nearly a third of the total growth achieved during the second half of last year, Dubai Media office said on Wednesday, citing data by Dubai Statistics Centre. The emirate’s gross domestic product expanded by 2.8 per cent in 2017.
The real estate sector, a major contributor to Dubai's economy, expanded by 7 per cent last year and accounted for nearly a quarter of total growth. Moderate rental rates in the emirate considerably drove demand, it added.
The competitiveness of Dubai’s markets and the efficiency of its economy have “reflected positively on the productivity of its various economic sectors and pushed the wheels of economic growth”, said Arif Al Muhairi, executive director at the DSC.
“The improvement in the performance of all economic activities clearly shows the extent of flexibility of Dubai’s economy,” he said. “Constructive economic policies played a key role in achieving such a balanced economic performance and growth while considering the current slow economic conditions dominating the global economy.”
Dubai, which has one of the most diverse economies in the Arabian Gulf region, relies mainly on the non-oil sector for economic growth. The real estate sector, which has softened in recent years on oversupply and a three-year oil price slump that began in mid-2014, is expected to bounce back as economic activity gathers momentum.
The emirate is preparing to host Expo 2020 and is also investing heavily on infrastructure ahead of the global fair.
The emirate in January approved its 2019 budget, with higher revenues targets, setting expenditure at Dh56.8bn, a slight rise from a year earlier. The budget includes an allocation of Dh9.2bn earmarked for infrastructure projects. The government maintained the size of this year’s budget equivalent to its record 2018 budget.
The government sector achieved an overall growth rate of 1.4 per cent in 2018, and the preliminary data shows that public spending on infrastructure in 2018 grew nearly a third year-on-year. The spending spree also positively impacted growth in the construction sector, which rose by 4.5 per cent last year and contributed 14.5 per cent to total economic growth of the emirate.
In June, Dubai and Abu Dhabi announced they were exempting companies from administrative fines for at least the rest of the year, as part of efforts to stimulate business growth. Dubai announced in April plans to attract new investments and cut the cost of doing business across sectors ranging from tourism to financial services.
The emirate slashed aviation and municipality fees in July and scrapped 19 fees related to the aviation industry as it seeks to attract more than Dh1bn of foreign investments into the sector, state news agency Wam reported.
The transport and storage sector expanded by 2.1 per cent and accounted for 13 per cent of the GDP growth last year. The sector plays a vital role in Dubai’s economy given that it is highly related to all other economic sectors, especially tourism. The passenger traffic at Dubai airports climbed 1 per cent year-on-year to 90 million in 2018, Mr Al Muhairi said.
Activity for hospitality and restaurants grew 4.5 per cent, driving overall economic growth by 11.5 per cent. Data shows that hotel and hotel apartments reservations grew by 3.2 for the period.
The financial and insurance sectors expanded 0.6 per cent last year. Total credit of all banks operating in UAE increased by 4.8 per cent to reach nearly Dh1.6 trillion at the end of 2018. About 22 per cent of the credit went to personal and consumption categories which helped drive demand for goods and services, the media office said, citing data released by the Central Bank of the UAE.
Updated: March 27, 2019 02:01 PM