Dubai’s Economy Grew by 1.94% in 2018
Image: Arif Al Muhairi, Executive Director of DSC
Stimulus Government Packages Drive Growth by 2.2% in Second half 2018 Compared to 1.7% in First half 2018
According to a recent report released by Dubai Statistics Center (DSC), it was revealed that Dubai's GDP at constant prices achieved a growth rate of 1.94% in 2018 compared to 2017 with a value added of 398.129 billion AED. Arif Al Muhairi, Executive Director of DSC, stated that the competitiveness of Dubai's markets and the efficiency of its economy have stimulated the demand and reflected positively on the productivity of its various economic sectors and pushed the wheels of economy growth to reach nearly 2%.
He added: "The improvement in the performance of all economic activities clearly features the extent of flexibility of Dubai's economy, this flexibility and constructive economic policies played a key role in achieving such a balanced economic performance and growth while considering the current slow economic conditions dominating the global economy."
Al Muhairi revealed that GDP growth in 2018 was largely driven by the performance of the trade activities which grew by 1.3% compared to 2017, it contributed by 18.1% of the total growth achieved in 2018 and by 30% of the total growth achieved during the second half of 2018. The real estate activity also grew by 7% in 2018 and contributed by nearly 25% to the total economy growth achieved. Al Muhairi stated that, the moderate rental rates in Dubai boosted the demand on renting the real estate units considerably."
As for the other sectors contributions, Al Muhairi stated that the transport and storage sector accounted for 13% of the GDP growth during 2018, as a result to the sector's growth by 2.1%. He pointed out that the transport and storage sector plays a vital role in Dubai's economy given that it is highly related to all economic sectors, as it supports various economic activities by providing the transport and logistics services to all. In addition to its close connection with tourism sector. The passengers' traffic at Dubai airports grew in 2018 at a rate of 1% compared to 2017, with a total number of 90 million passengers, which positively impact the transport and storage sector.
Accommodation and food services (Hotels and Restaurants) raised by 4.5% in 2018 compared to 2017, driving overall economic growth by 11.5%. Data show that hotel and hotel apartments reservations grew by 3.2% in 2018 compared to 2017. The promotions offered by the hotels attracted visitors and motivated them to spend longer days there.
On another level, financial and insurance sectors grew by 0.6% during 2018 contribute to the overall economic growth by 3.3%. According to Data released by the Central Bank of UAE the Total credit of all banks operating in UAE increased by 4.8% to reach nearly 1.6 Trillion AED by end of 2018. Based on the analysis of credit for residents by economic activity, it was clear that 22% of this credit were for personal and consumption purposes and this contributed in increasing demand for goods and services. On the other hand, it was found that 21% of total residents Credit was allocated for activities related to construction and real estate sector, while trading activities accounted for 10% of Total Credit for residents.
The data of the Central Bank of UAE also show that the Total Deposit of all banks operating in UAE achieved a growth rate of 7.4% for residents and 11% for non-residents out of which corporate deposits accounted for 39% while individuals' deposits accounted for 25% of Total Deposits. These Deposits show the banks' capabilities to respond to demand on credit, and in enhancing the economic development by providing financing for all activities and purposes.
Al Muhairi also revealed that the government sector achieved a growth rate by 1.4% in 2018 accounting for 3.6% of the total growth achieved in Dubai's economy. The preliminary data demonstrated that the government spending in 2018 on infrastructure projects went up by 32% compared to 2017. Government spending on infrastructure affected the growth in the construction sector, which grew by 4.5% in 2018, and contributed by 14.5% to total economic growth of Dubai.
Al Muhairi concluded, the government investment in infrastructure projects proves that the government is moving forward in developing and enhancing Dubai's infrastructure which plays a strategic role in supporting the economic development and providing a supporting and stimulating environment for business sector to flourish.