Dubai’s gross domestic product (GDP) grew by 2.6 per cent or Dh10 billion to reach Dh389 billion last year, with the wholesale and retail trade and transportation and storage sector leading the pack.
According to figures released by the Dubai Statistics Centre (DSC) on Saturday, the wholesale and retail sector contributed 26.6 per cent, or Dh103.6 billion, to Dubai’s real GDP. The transportation and storage sector’s contribution to the total growth achieved was 18.5 per cent in 2017. It contributed Dh46.1 billion last year as compared to Dh44.1 billion in the previous year.
Arif Al Mehairi, executive director of Dubai Statistics Centre, said total imports and re-exports grew by 2.2 per cent, which can be attributed to a growth in industrial inputs and capital goods.
The IMF had forecast 3.3 per cent growth for Dubai for 2017 and 3.5 per cent for 2018.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the growth in transportation and storage was supported by a pickup in global growth and trade.
“A shift to a more expansionary stance by other GCC countries in 2018 will be positive for Dubai’s economic outlook. The weak regional demand has been a headwind for Dubai. We also see an acceleration in investment activity this year,” Malik told Khaleej Times.
Fisch Asset Management, a credit analysis firm, said last week that Dubai’s growth will remain at a sustained level of around 3 per cent over the next few years, if oil prices remain stable around current levels.
Arif Al Mehairi noted that transportation and storage includes all land transportation and air transportation of individuals and goods.
According to Dubai Statistics Centre, manufacturing sector in Dubai contributed 9.4 per cent to the emirate’s GDP with a total value of Dh36.8 billion last year as compared to Dh36.1 billion in the previous year.
“Manufacturing plays a key role in advancing growth and sustainability in Dubai’s economy,” Al Mehairi said, adding that certain industries in Dubai are among the world’s leading and most competitive, including aluminium and cable industries, apart from many others.
While real estate sector accounted for 7.1 per cent of Dubai’s real GDP contributing Dh27.6 billion in 2017 compared to Dh25.7 billion in 2016. The real estate sector’s performance is measured based on rental transactions and margins earned from sale and purchase transactions and commissions generated through real estate brokerage.
While the construction sector showed significant improvement compared to previous years, contributing Dh24.5 billion, contributing 6.3 per cent to Dubai’s real GDP.
Accommodation and food service activities witnessed a remarkable step-up in its performance with a contribution of 4.9 per cent to Dubai’s real GDP and a growth rate of eight per cent.
Overall, strategic sectors accounted for 72.2 per cent of total growth in 2017.
Atik Munshi, senior partner, Crowe Horwath, noted that 2017 witnessed growth in non-traditional sectors like transport and storage.
“Now Dubai is a mature economy. In order to have better growth prospects in the future years, the state should promote the industrial and service sectors. In case of all major economies around the world, these 2 sectors are the major contributors. Needless to mention that the traditional retail and tourism sectors should not lose focus. Retail sectors needs some boost as they have taken a step back in view of the increasing operating costs which is mainly rent and employee overheads,” Munshi added.
To boost and attract the industrial sector of international repute, he said the economy needs to provide the needed benefits and ensure that the costs are controlled to the desired level. “I feel that the next year economy will fare even better in view of the proximity to Expo 2020.”
Naveen Sharma, chairman, The Institute of Chartered Accountants of India (ICAI), said Dubai is doing a lot and government is proactive.
But in order to boost the GDP, he suggests that the emirate should relax visa requirements further and give on-the-spot visa for longer period of time for more countries.
“It should also encourage industrial training and other on the job training. It should also come up with retraining skills of middle level managers as lots of innovation is happening and a proper structural framework is need of the hour so Dubai as a city is ahead of others,” he added.