Dubai forecasts 3.1% economic growth for this year

Dubai’s economy grew 2.7 per cent last year, said Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Economic Development Committee in Dubai. Reem Mohammed / The National

Dubai is forecasting higher economic growth of 3.1 per cent for this year and plans to provide an economic outlook twice a year, a move that will boost transparency.

The emirate has not previously given regular economic updates.

Dubai’s economy grew 2.7 per cent last year, Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Economic Development Committee in Dubai, said at the UAE Economic outlook 2017 conference in the emirate on Tuesday.

“More than three decades ago, our leadership put diversification on the top of the development pyramid in Dubai and the growth vision and strategies adopted since then have all focused on accelerated and sustainable growth,” Sheikh Ahmed said. “It has led to faster integration of the emirate’s economy into the global economy and quantitative as well as qualitative growth away from oil.”

He said the economic outlook, which will be published in January and October each year, will reveal the economic opportunities in Dubai at the macroeconomic and sectoral levels.

“Regarding the importance of revealing Dubai’s economic outlook twice a year – it is positive for transparency and highlighting economic strategies,” said Monica Malik, the chief economist at Abu Dhabi Commercial Bank.

Sheikh Ahmed’s growth forecast for this year is more conservative than the IMF, which expects growth to recover to 3.6 per cent, after the fund said it slowed to 3.3 per cent last year, down from 3.5 per cent in 2015.

“Dubai’s economy with its flexible/adaptive economic model, with its top-class infrastructure, will be able to grow in line with the official figures, despite the challenging global environment,” said Alp Eke, the senior Mena economist at National Bank of Abu Dhabi. “The sharp drop in oil prices had mixed effects on Dubai’s economy but the external factors have proven to be in Dubai’s favour.”

Dubai’s economic conditions improved at the end of last year with the help of the non-oil sector.

An upturn in construction activity in Dubai last month helped to buttress the non-oil economy, which expanded at the fastest rate since July, according to the seasonally-adjusted Emirates NBD Dubai Economy Tracker Index.​

Dubai’s economic growth this year will hinge on investments, according to Ms Malik.

“We expect to see an acceleration in economic activity in 2017 led by stronger investment activity and see the 2017 GDP growth target as achievable,” she said.

Dubai plans to spend Dh47.3 billion this year, a budget that will be driven by a 27 per cent jump in infrastructure spending as the emirate prepares for Expo 2020.

The budget shows a 3 per cent rise in total government expenditure, while revenues will be lower owing to the restructuring of the budget. The restructuring and the new classification of entities resulted in a decrease in projected revenue figures for the fiscal year 2017, compared with 2016, according to Wam news agency.

The Financial Regulations for the Government of Dubai Law No.(1) for the year 2016 had a great impact on restructuring the emirate’s budget. The Financial Regulations Law identified new classification for the general budget, acknowledging general, independent and extension budgets.

Dubai anticipates a deficit of Dh2.5 billion, representing 0.6 per cent of GDP.

Dubai, which is unrated by credit agencies, has yet to say how it will finance its fiscal deficit, but in the past the emirate has issued bonds for its financing needs.

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