Dubai forecasts 3.1% economic growth in 2021, 3.4% in 2022

Dubai expects to record an economic growth of 3.1 per cent in 2021, and 3.4 per cent in 2022, according to forecasts shared by Dubai’s Department of Economic Development (Dubai Economy).

The accommodation and food services sector is forecasted to grow 8.5 per cent in 2021, compared to 2020, while the transport, storage and communications sectors by 4.1 per cent and the wholesale and retail trade sector is also expected to achieve a growth of 4.7 per cent in 2021. However, construction activity will likely decline in 2021 by 2 per cent.

Sami Al Qamzi, Director General of Dubai Economy, said that the growth is expected to accelerate in 2022 and reach 3.4 per cent, driven by the sectors including tourism and international transport, as well as the benefit of hosting the Expo 2020 which will extend into the first three months of 2022.

“The bright outlook for growth in the emirate has been made possible by the vision and leadership of 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,” said Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council of Dubai.

The economic performance report issued by Dubai Statistics Center indicates that Dubai’s economy achieved a growth of 1 per cent during Q1 2021, compared to Q4 2020, based on preliminary estimates of the seasonally-adjusted GDP data.

This growth is driven by the manufacturing sector, tourism, transport and storage activities, in addition to the significant growth in the financial sector’s performance for the same period, according to news agency WAM.

Business leaders in the UAE welcomed the news of the latest economic forecasts. “This is commendable as the world is coming out of the economic distress and the Gulf Cooperation Council (GCC) economies are expected to grow at only 2.2 per cent in 2021, according to the World Bank’s Gulf Economic Update published recently,” said Dr Azad Moopen, founder chairman and managing director of Aster DM Healthcare.

Aref Al Muhairi, executive director of Dubai Statistics Center explained that Dubai’s economy contracted by -3.7 per cent in Q1 2021 compared to Q1 2020. However, this contraction is much less than that in Q1 2020 where it reached -10.9 per cent compared to Q1 2019.

.@Dubai_DED announces its latest economic outlook according to which it expects the emirate to record a growth of 3.1% this year. Spurred by the hosting of Expo 2020, Dubai’s growth is projected to accelerate to 3.4% in 2022.https://t.co/a3AfedFW1k pic.twitter.com/KNxhwWRwNl

— Dubai Media Office (@DXBMediaOffice) September 21, 2021

Al Muhairi indicated that despite the decline in certain activities in Q1 2021, others grew including the trade sector, which contributes close to 24 per cent to Dubai’s GDP and whose growth reached 2.8 per cent in Q1 2021 compared to Q1 2020.

Dubai’s foreign trade data issued by Dubai Customs showed that non-oil foreign trade grew in Q1 2021 by 10 per cent, reaching Dhs354.4bn, compared to Dhs323bn in Q1 2020. Exports achieved a significant growth of 25 per cent, reaching Dhs50.5bn, and the value of imports increased by 9 per cent to reach Dhs204.8bn, while the value of re-exports increased by 5.5 per cent to Dhs99bn.

The financial and insurance activities also achieved a year-on-year growth rate of 3.5 per cent in Q1 2021 and its contribution to the emirate’s GDP rose to reach 12.8 per cent. This performance resulted from the growth of total deposits and loans during Q1 2021, as loans grew by 2.6 per cent and deposit balances grew by 3.3 per cent, while interest rates on loans decreased by 24 per cent and on deposits by 35 per cent.

Moreover, the manufacturing industry also witnessed a growth of 3.2 per cent, and its contribution to the overall economic performance increased to 9.5 per cent. The activities of the food industry, pharmaceutical products, rubber and plastic products, and base metals manufacturing contributed to the growth of the manufacturing sector positively. Real estate achieved a growth rate of 2.4 per cent during Q1 2021, compared to Q1 2020, contributing to 8.7 per cent of the real GDP.

The Dubai Statistics Center report indicates that during Q1 2021, the Covid-19 pandemic affected the accommodation and food services, transport and storage sectors. Both activities decreased by 25.6 per cent, compared to Q1 2020.

From March 2020 until September 2021, the government of Dubai has introduced several initiatives to spur economic growth 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 stimulus packages announced by the emirate’s government since the start of the pandemic amounted to Dhs7.1bn, or 1.6 per cent 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.

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