Dubai economy to grow 3.1% this year on Covid-mitigation measures and Expo 2020

Dubai’s economy is forecast to expand 3.1 per cent in 2021, helped by effective policy measures that minimised the impact of Covid-19, according to the latest government projections.

The hosting of the six-month Expo 2020 global trade fair, which begins in October, has also spurred economic activity this year and laid foundations for even faster growth momentum, according to data from the Department of Economic Development. The emirate’s gross domestic product is expected to expand 3.4 per cent in 2022.

Dubai's leadership took “decisive measures” to ease the repercussions of global challenges on the emirate's economy and those efforts were supplemented by new legislation and amendments to the investment and residence laws in the country, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and chairman of the emirate’s Executive Council, said in a Dubai Government Media Office statement on Tuesday.

“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,” Sheikh Hamdan said.

“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.”

The economy of Dubai, the commercial and tourism hub of the Middle East, has bounced back strongly from a pandemic-driven slowdown that disrupted global trade flows and severely affected travel and tourism sectors last year, tipping the world economy into its worst recession since the 1930s.

Tourism and real estate sectors that are key to Dubai's economy have made a significant recovery on the back of stimulus packages worth Dh7.1 billion ($1.93bn) since the outbreak of Covid-19 to support the economy, businesses and people.

“These packages came on top of economic support measures launched by the UAE Federal government,” Sami Al Qamzi, director general of Dubai Economy, said.

“Between September 2020 and July 2021, Dubai witnessed a relatively faster recovery in sectors such as transport and tourism compared to other countries.”

A nationwide campaign at pace to inoculate the population against the pandemic has also boosted investor confidence and put the economy “firmly on the recovery path”, Mr Al Qamzi added.

In June, Dubai reduced or cancelled fees for 88 government services to reduce financial pressures on businesses, lower the cost of living, support investors and improve the business environment in the emirate.

In June, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, launched new initiatives to support family companies, help start-ups and attract more skilled workers to the UAE.

Business confidence in Dubai has risen to a seven-year peak as companies in the emirate expect conditions to improve ahead of Expo 2020, according to a survey by the Dubai Chamber of Commerce & Industry.

The forecast by the DED, known as Dubai Economy, also takes into account the expected positive impact of Expo 2020 on economic momentum in the country.

The emirate expects the accommodation and food services sector to record 8.5 per cent year-on-year growth in 2021. Its transport, storage and communications sector is projected to grow by 4.1 per cent, 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 per cent in 2021,” according to government estimates.

However, construction activity is likely to decline in 2021 by 2 per cent as a result of “stabilisation in the construction of residential, office and hotel space, and a relative decline in construction related to infrastructure following rapid growth recorded in the years before 2020".

“Growth is expected to accelerate in 2022 … 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 DED said.

During the first three months of this year, Dubai recorded 1 per cent quarter-on-quarter growth, which signalled the start of the recovery phase, Dubai Economy said, citing Dubai Statistics Center's preliminary estimates of the seasonally-adjusted GDP data.

“These figures indicate that there is a positive development and rapid recovery of both Dubai’s and the UAE’s economy, compared to 2020,” Aref Al Muhairi, Executive Director of Dubai Statistics Center, said.

First-quarter Dubai foreign trade data issued by Dubai Customs indicated a 10 per cent jump in the emirate's non-oil foreign trade to Dh354.4bn. Exports achieved significant growth of 25 per cent, reaching Dh50.5bn, and the value of imports increased by 9 per cent to Dh204.8bn, while the value of re-exports increased by 5.5 per cent to Dh99bn.