Dubai economy on course to grow at fastest rate in six years

Dubai’s economy is on course to grow at its fastest rate in six years, underpinned by strength in trade, tourism and manufacturing.

Tourism has been a major driver of Dubai’s economic growth. Razan Alzayani / The National

Dubai’s economy is on course to grow at its fastest rate in six years, underpinned by trade, tourism and manufacturing.

It follows the release yesterday of official data showing GDP accelerated 4.9 per cent to reach Dh169 billion in the first half of the year.

Growth reached 4 per cent in the same period of last year, said Dubai Statistics Centre.

The strength of expansion in hospitality and manufacturing was a surprise, according to Khatija Haque, the senior economist of Emirates NBD.

“We were expecting growth in both these sectors to moderate somewhat in 2013,” she wrote in a research note yesterday.

“These growth rates are all the more impressive as they are calculated off a high annual base; hospitality grew nearly 17 per cent last year, while manufacturing was up more than 13 per cent.”

Ms Haque wrote that the bank’s GDP forecast for Dubai of 4 per cent for this year might be too conservative.

Since languishing in a crisis linked to a property crash and a debt crisis during the years 2009 and 2010, Dubai’s economy has regained momentum.

Property prices have shot up, with average apartment prices rising by 42 per cent during the 12 months to the end of September, according to Asteco, a broker. Increasing numbers of tourists has supported demand in hotels, restaurants and shopping centres.

Hospitality and manufacturing enjoyed the strongest growth in the first half of the year, rising 13.7 and 13.3 per cent, respectively.

The number of hotel guests grew 11.1 per cent to reach 5.6 million, the statistics centre said. The number of rooms available increased by 4,729 to 58,950.

Wholesale and retail trade, which accounts for about 30 per cent of the economy, grew 4.1 per cent in the first half of the year.

Transport, storage and communications expanded 4.9 per cent.

Property and business services edged 3.3 per cent higher, while construction edged up 0.4 per cent, according to the data. Utilities expanded 4 per cent.

Growth registered 4 per cent last year, rather than its earlier estimate of 4.4 per cent, the centre said.

GDP expansion reached 9.2 per cent in 2007, according to official estimates.

The centre also revised upwards its GDP estimate for 2011 to 3.2 per cent, from 3 per cent previously.