Rising global inflation rates have not had as much of an impact on Dubai as on other markets as the emirate maintains a diversified supply chain, continues to attract talent from around the world and ranks favourably on cost of living indexes, a top government official said.
The Middle Eastern finance and tourism hub's central location and strong air and maritime connections make it a part of the solution to global supply chain disruptions, Helal Al Marri, director general of Dubai’s Department of Economy and Tourism, said on Thursday during Bloomberg's UAE Capital Markets Forum.
“The inflation we've seen so far has not impacted us in the same way it has impacted other markets because we have a very diversified source market strategy, not just in tourism but across the board in the value chain,” said Mr Al Marri, who is also a member of the Executive Council of Dubai and director general of the Dubai World Trade Centre Authority.
“As long as we can continue to fuel the growth through growing various sectors — manufacturing, finance, tech — we'll be able to grow out of this. Real growth will remain high and as long as real growth remains high, we feel relatively confident that we're not going to fall into any stagnation.”
Inflation in the UAE is forecast to rise to 2.2 per cent this year from 0.6 per cent in 2021, according to the International Monetary Fund.
The Central Bank of the UAE increased its benchmark interest rate in line with the US Federal Reserve's decision to raise its key rates on Wednesday to rein in inflation, which has hit a 40-year high in the world's largest economy.
The banking regulator raised the base rate applicable to the overnight deposit facility by a quarter of a percentage point, effective from Thursday.
The size of Dubai's economy and the city's location make it agile enough to tap into different supply chains quickly, Mr Al Marri said.
“In relative size, it's not as hard for us to manoeuvre, there's a dynamism, so we're able to shift focus if we find sectors are affected through a shock,” he added.
Asked if oil prices soaring above $100 per barrel would cause a pause in the UAE's economic diversification agenda, Mr Al Marri said: “The simple answer is no. The UAE and Dubai are on a very clear path. The urgency and steady delivery, even through Covid, means nothing has slowed down.”
Given the global economic uncertainty, there's “even more urgency” for the UAE to continue developing various non-oil sectors, attracting talent and boosting tourism, Mr Al Marri said.
“There is definitely going to be a boom [in tourism] as Covid restrictions ease around the world.”