Dubai is the largest and most populous city in the United Arab Emirates. On the southeast coast of the Persian Gulf, it is the capital of the Emirate of Dubai, one of the seven emirates that make up the country.
Dubai is a global city and business hub of the Middle East. It is also a major global transport hub for passengers and cargo. Oil revenue helped accelerate the development of the city, which was already a major mercantile hub, but Dubai’s oil reserves are limited and production levels are low: today, less than 5% of the emirate’s revenue comes from oil.
Dubai’s economic base is diversified, yet closely intertwined with the growth rates of its international trading partners, and this complex relationship can positively boost or lower the impact of financial trends worldwide. This chapter presents historical data on Dubai’s annual GDP and the correlating economic performance of other selected advanced and emerging world economies. Background data is also presented on Dubai’s trading relationships with regional GCC partners as well as major players such as China, the US, Russia and India.
Dubai’s economic performance in 2017 has been influenced by its exposure to economic conditions in the region in which it resides and to the prospects of some of its main trading partners, particularly Saudi Arabia, Oman, Kuwait, and Iraq. Falling oil prices dampened demand in this region, particularly in the GCC, holding back the strength of Dubai’s growth in 2017. Economic growth in Saudi Arabia turned negative in 2017 falling by minus 0.9 per cent in constant prices from 1.7 per cent in 2016.
Despite the global slowdown in cross-border capital flows since 2007, the Dubai International Financial Centre (DIFC), acting as an offshore financial hub in the Middle East, Africa and South Asia (MEASA) region, has steadily expanded its role and was ranked first in the area as a result of its achievements in 2017. Set up in 2004, the DIFC lies in a strategic location midway between the global financial hubs of London and New York in the west and Singapore and Hong Kong in the east.
Foreign Direct Investment
According to the Dubai FDI Monitor, in 2017 AED 27.3 billion (US$7.4 billion) in Foreign Direct Investment (FDI) capital entered the emirate, a rise of 7 per cent over the previous year, an increase greater than the growth in real GDP. FDI, net inflows, as a percentage of GDP in the emirate stood at 6 per cent in 2017 compared with 2.7 in the UAE as a whole, 0.2 per cent in Saudi Arabia, 4.0 per cent in Oman and 1.8 per cent in the MENA region as a whole.
Indicators of Dubai’s Economy
Dubai’s Gross Domestic Product (GDP)
Dubai’s GDP in constant prices reached AED 389.4 billion (US$106.1 billion) in 2017, up by 2.8 per cent from AED 378.8 (US$103.2 billion) in 2016. This can be compared to a higher rate of growth of 3.1 per cent achieved in 2016. Dubai’s economic performance is often compared to cities similar in terms of size and in their dependence on international trade.
Dubai’s GDP structure is shown in the data produced by Dubai Statistics Center which breaks down total GDP into twenty economic activities. In 2017 the main seven of these sectors accounted collectively for 76.5 per cent of GDP, down slightly from their share in 2016.
Dubai is the most popular tourist destination in the Gulf and the fourth most popular destination worldwide according to Master Card’s Global Destination Cities Index. According to the World Travel and Tourism Council the sector directly contributed 3.2 per cent of global GDP or US$2.57 trillion in 2017.2 The total contribution taking account of indirect effects on other sectors and multiplier effects based on induced investment spending and the collective spending of governments and of employees was estimated at 10.4 per cent of global GDP. This is expected to grow by 3.8 per cent per annum from 2018 to reach 11.7 per cent of world value added by 2028.
INVESTMENT INSIGHT INTO THE TOURISM SECTOR
While Dubai was ranked fourth by MasterCard’s Global Destination Cities Index, it was ranked first in terms of total expenditure by tourists amounting to US$29.7 billion (AED 109.3 billion dirhams) in 2017 ahead of London with a growth rate for the emirate of 6.2 per cent over the previous year.
Wholesale and retail trade is the most important activity in the services sector in Dubai and in 2017 it represented 26.6 per cent of GDP (in constant prices. The wholesale and retail sector has evolved over the years, due to factors such as the creation of a modern and robust infrastructure, effective distribution channels to neighbouring emirates, rapid urbanization and the shift of shopping centres to suburbs instead of town centres. This chapter identifies strengths and challenges to Dubai’s retail trade, along with its important correlation to the tourism sector.
Banking, capital markets and insurance activities accounted for the third largest sectoral contribution to Dubai’s GDP in 2017 generating value added of AED 40.5 billion or 10.1 per cent of the total. In terms of employment, the sector ranked in 11th place among 20 sectors in the economy and labour productivity was among the highest with AED 868,785 per worker, in 3rd place.
3. Market Analysis by industry
- Arts & Crafts Making
- Computer Related Businesses
- Fish Farming
- Food Processing & Delivery Services
- Green Business
- Home Based Cooking Business
- IT Industry
- Jewellery making
- Oil & Gas
- Poultry Farming
- Real Estate
- Recruitment Agency
- Recycling Business
- Security Service
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