As per the Dubai Statistics Center, Dubai’s real gross domestic product (GDP) reached Dh389 billion in 2017 compared to Dh379 billion in 2016. This marked an increase of 2.8 percent.
DSC stated that the growth was mainly contributed by the performance of strategic sectors. It accounted for 72.2 percent of total growth in 2017. It was revealed that the transportation and storage sector was the biggest contributor to total economic growth at 18.5 percent. It surpassed wholesale and retail trade that forms the largest sector in the emirate. The wholesale and retail trade sector’s contribution to growth was 8.3 percent.
The contribution of the real estate sector to Dubai GDP
Real estate forms one of the vital sectors that contributes to the Dubai economy in general. It is a major driver of Dubai’s economy. This is mainly because it draws significant foreign investment. Dubai boasts advanced infrastructure and logistics services other than a legislative and administrative system. The latter promotes real estate investment in Dubai.
The real estate sector’s performance is measured on the basis of rental transactions and margins secured from sale and purchase transactions and commissions. These are created through real estate brokerage.
As per the experts, the real estate sector accounted for 7.1 percent of Dubai’s real GDP contributing Dh27.6 billion in 2017 compared to Dh25.7 billion in 2016. The sector that rose by 7.3 percent contributed 17.6 percent to Dubai’s total growth. It is being seen that Dubai is bringing more transparency to the way it is managing its economy. It is doing so by forecasting growth for the overall economy as well as for its key sectors including real estate and tourism.
According to Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Dubai’s Economic Development Committee stated that the investments will give way to growth in 2018. At the same time, it will also provide growth forecasts for the Emirate’s real estate, tourism, and manufacturing sectors. These sectors are predicted to be the major drivers of growth going forward.
In the meanwhile, Sami Al Qamzi, the director general of Dubai Economy, revealed a growth forecast of 3.6 percent for next year. This was in line with projections from the International Monetary Fund.
The major driver for growth for 2018 is expected to be the investments, mainly those related to preparations for Expo 2020. As per the economists at the IMF and the Bank of America, the UAE’s medium-term non-oil growth will reach 3 percent or higher. This is expected to happen due to investments in the lead-up to Expo 2020. This type of predictions is important for setting economic policies. They put light upon the government strategies. They show their consistency over time. Since the world is marked by economic uncertainty and political volatility, it is important for government policy to be predictable.
Since the last few years, Dubai has adopted plenty of measures towards being more proactive. This mainly shows at the time of communicating with key stakeholders. This is because it continues to chart its way forward after rebounding from the 2008 financial crisis.
Dubai has been able to generate multiple policies aimed at pushing further its diversification agenda. As per the prediction made by the Dubai Industrial Strategy 2030, the promoting six key industry sub-sectors will help add Dh160bn to the emirate’s GDP by 2030. Manufacturing was reckoned to be a vital sector that will help boost growth this year and in 2018. It was growing at a pace of 3.3 percent and 4.1 percent respectively.
Last year, Dubai’s gross domestic product (GDP) grew by 2.6 percent or Dh10 billion to reach Dh389 billion. The wholesale and retail trade and transportation and storage sector drove the pack. The wholesale and retail sector contributed 26.6 percent, or Dh103.6 billion, to Dubai’s real GDP. The transportation and storage sector’s contribution to the total growth achieved was 18.5 percent in 2017. It accounted for Dh46.1 billion last year as compared to Dh44.1 billion in the previous year.
The total imports and re-exports grew by 2.2 percent. This can be attributed to a growth in industrial inputs and capital goods. The IMF had forecast 3.3 percent growth for Dubai for 2017 and 3.5 percent for 2018.
As per Monica Malik, chief economist at Abu Dhabi Commercial Bank, the growth in transportation and storage was supported by a pickup in global growth and trade.
Some experts claim that Dubai’s growth will remain at a sustained level of around 3 percent over the next few years, provided the oil prices remain stable around current levels.
Dubai needs to strive to see higher growth in e-commerce and the services industry. The real GDP to grow by 2.5 to 3.5 percent in 2018-19. Oil prices have shown a slight increase in inflation figures could set the tone for Dubai going forward.
From an overall perspective, the strategic sectors accounted for 72.2 percent of total growth in 2017.
It can be said that Dubai is a mature economy. To attain better growth prospects in the upcoming years, the state needs to promote the industrial and service sectors. The traditional retail and tourism sectors should not lose focus. Retail sectors are expected to require some boost since they have taken a step back in view of the increased operating costs.
In order to strengthen the industrial sector of international repute, the economy needs to provide the needed benefits and make sure that the costs are controlled to the desired level. It is expected that the next year economy will fare even better in view of the proximity to Expo 2020.
For strengthening the GDP further, Dubai needs to relax visa requirements further and give on-the-spot visa for a longer period of time for more countries.
Source: Property Price Index.