DUBAI / WAM
Dubai’s Department of Economic Development (Dubai Economy) on Tuesday announced its latest economic outlook according to which it expects the emirate to record a growth of 3.1 percent this year. Spurred by the hosting of Expo 2020, Dubai’s growth is projected to accelerate to 3.4 percent in 2022.
HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council of Dubai, said: “The bright outlook for growth in the emirate has been made possible by the vision and leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, under whose guidance the government undertook decisive measures to ease the repercussions of global challenges on the economy.”
“’These efforts were accompanied by new legislation and amendments to the investment and residence laws in the country. Cumulatively, these moves revitalised the economy and stimulated a strong flow of local and foreign investment, allowing the emirate to resume its journey of development, diversification and sustainable economic growth. Over the coming years, Dubai promises to be an even bigger global destination for investment and talent and a city that offers exciting new opportunities for businesses, entrepreneurs and innovators,” he added.
Following the leadership’s directives, DED made concerted efforts to mitigate the pandemic’s impact on businesses, especially by facilitating transaction procedures and commercial licenses. The Department continues to adopt best practices and high-quality standards in its quest to make Dubai the world’s leading smart city. DED’s active engagement and open communication lines with the business community and society at large have ensured the design and implementation of the best precautionary and practical measures, and safety rules that guarantee both public safety and smooth operations.
Commenting on the latest economic outlook figures, Sami Al Qamzi, Director General of Dubai Economy, said, “Dubai’s latest economic indicators show that the precautionary measures, comprehensive vaccination campaigns, stimulus packages, and legislative amendments that the UAE and Dubai have adopted were right on target. Dubai’s economy is now firmly on the recovery path and supported by increasing business and consumer confidence. This includes in particular business activities that were most negatively impacted by the pandemic such as tourism and transport. Under the guidance of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and follow-up of H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince and Chairman of The Executive Council of Dubai, the Emirate has resumed its development journey guided by a comprehensive and ambitious strategic vision that seeks to enhance domestic demand and exports, open new markets, and attract investors and talent.”
In the year 2020, Dubai’s actual output was below its existing production capacity similarly to elsewhere in the world. Confinement measures weighed on both supply and demand that jointly led to a significant decline in economic activity, including in Dubai, despite the significant support provided by the government to firms in all sectors.
Al Qamzi recalled the five consecutive stimulus packages that the Government of Dubai has launched during the period from March 2020 to September 2021, which contained a number of support measures, such as the suspension and reduction of various fees, reduction of customs duties, water and electricity bills, postponing rent payment, and canceling fines. The total financial cost of the five packages amounted to AED7.1 billion, or 1.6 percent of Dubai’s GDP. These packages came on top of economic support measures launched by the UAE Federal Government, including the ‘Targeted Economic Support Scheme’ that the Central Bank of the UAE launched in March 2020 to ease the financial burden on firms and help many of them to avoid bankruptcy.
Al Qamzi noted that despite setbacks to the global economy from pandemic-related developments, Dubai witnessed between September 2020 and July 2021 a relatively faster recovery in sectors such as transport and tourism compared to other countries. Expo 2020 is expected to provide a strong economy-wide boost especially in the transport and tourism sectors.
Taking account of recent developments and future prospects and risks during the period ahead, DED forecasts Dubai GDP to grow by 3.1 percent in 2021, given the significant recovery beginning in Q2, particularly in the activities that witnessed an almost complete shutdown in April and May 2020. The forecast also takes into account the expected positive impact of Expo 2020 on economic activities.
It is also expected that the accommodation and food services sector will grow by 8.5 percent in 2021, compared to 2020, and transport, storage and communications by 4.1 percent, reflecting the gradual recovery expected until the end of 2021 in tourism and transport activities. The wholesale and retail trade sector is also expected to regain a large part of its activity following the COVID-19-induced slowdown, achieving a growth of 4.7 percent in 2021, while construction activity is likely to decline in 2021 by 2 percent as a result of stabilization in the construction of residential, office, and hotel space, and a relative decline in construction related to infrastructure following their rapid growth recorded in the years before 2020.
Al Qamzi pointed out that growth is expected to accelerate in 2022 and reach 3.4 percent, driven by the continuous recovery of activities that were most affected by the pandemic, such as tourism and international transport, which will also benefit from Expo 2020 activities in the first months of 2022.
The economic performance report issued by Dubai Statistics Center indicates that Dubai’s economy achieved a growth of 1% during Q1 2021, compared to Q4 2020, based on preliminary estimates of the seasonally-adjusted GDP data.
This growth is driven by the outstanding performance of the manufacturing sector, the improvement in tourism, transport and storage activities, in addition to the significant growth in the financial sector’s performance for the same period.
Aref Al Muhairi, Executive Director of Dubai Statistics Center, said: “These figures indicate that there is a positive development and rapid recovery of both Dubai’s and the UAE’s economy, compared to 2020, which witnessed major economic declines worldwide, driven by the slowdown in the sectors of tourism, transport and other economic activities. This is a natural consequence of the pandemic on the global economy.”