Dubai’s economy expanded by 4.6 per cent last year, its fastest rate of growth since 2007, propelled by a solid performance spanning manufacturing to hospitality.
The economy grew to Dh325.7 billion, up from Dh311bn the year before, data released yesterday by Dubai Statistics Centre showed.
“The outlook for Dubai’s economy is positive in our view,” said Khatija Haque, the head of Mena research at Emirates NBD. “So far this year, the data has been encouraging. The UAE PMI data shows there has been a strong expansion in the non-oil sector and the recovery in the property market has underpinned positive sentiment.”
Dubai is the main motor of growth outside the UAE’s hydrocarbon sector. The economy has regained momentum after falling into recession in 2009 because of a debt and property crisis. Last year’s growth was up from 4.1 per cent in 2012. The IMF last week revised up its UAE growth forecasts for this year to 4.75 per cent, from 4.4 per cent previously.
Still, some economists had expected Dubai’s output reading for last year to be higher, to take it closer in line with other growth estimates for the year. Last week the National Bureau of Statistics released data showing UAE GDP reached 5.2 per cent last year, the same level as was previously estimated for growth in Abu Dhabi’s economy. It also said the UAE’s non-oil sector grew by 5.4 per cent. Dubai accounts for around 30 per cent of the UAE economy and the bulk of its non-oil sector.
Despite the apparent discrepancy, the data released yesterday reflected strength in the main pillars of Dubai’s economy. Manufacturing accelerated by 8.1 per cent, accounting for 1.1 percentage points of the growth. Wholesale and retail trade grew by 3.5 per cent, providing about 1 percentage point to growth. Transport, storage and communications expanded by 5.6 per cent, while hospitality expanded by 13 per cent, the third year in a row of double-digit growth. Growth in the financial sector rose by 3.6 per cent, accounting for 0.4 percentage points of growth.
The data also underlined the extent of the rebound in the property market. It grew by 4.7 per cent and provided 13.3 per cent of the total GDP, making it the fifth largest sector in terms of contribution to the economy. The sector has been gathering strength since stagnating in the wake of a debt crisis in 2009 that burned investors and stalled developments. Property prices advanced by an average of 30 per cent in the 12 months to March, according to Dubai Land Department. Last year was also the first since 2008 that the construction sector provided a positive lift to output. The sector expanded by 1.3 per cent, reflecting a renewed building boom emerging across the emirate.
Still, Dima Jardaneh, senior economist at EFG-Hermes, said the size of the property and construction sectors relative to the rest of the economy had yet to reach pre-crisis levels.
“In terms of distribution of growth, before the crisis construction and real estate accounted for about 30 per cent of the economy, but that rate has now declined to 20 per cent as other sectors have kicked in. We would like to see other sectors continue to grow at a robust level to help deter economic risks that could ensue from a concentration in the construction and property sectors,” she said.
tarnold@thenational.ae
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