Dubai Economy Grows 2.1% in H1 2019
Image: Arif Al Muhairi, Executive Director of the DSC
Al Muhairi: Robust Logistics Infrastructure is A Competitive Advantage for the Business Sector
“Trad” Tops the Economic Activities in Terms of Contribution to Dubai’s GDP
“Transportation” is the most Active Drivers of Economy in H1-2019.
Dubai's economy grew 2.1 percent on year to year basis in H1-2019, with the emirate's GDP reaching AED 208.2 bn at constant prices in the first six months of 2019, according to data published by the Dubai Statistics Centre, DSC.
Arif Al Muhairi, Executive Director of the DSC, said that the flexibility of Dubai’s economy and its business structure helped the emirate maintain its economic growth, despite the slowdown of the regional and global economy.
He also said that the wholesale and retail sector supported the overall growth of the local economy thanks to Dubai’s reliable infrastructure as it helped boost its re-export business and trade with countries both in the region and around the world.
Al Muhairi further said that the trade sector posted a real growth of 3.3% backed by higher external trade and higher re-exports, which grew by 3 percent to reach AED 210 bn in the first half of 2019.
“Trade” is a Milestone in Dubai’s Economy
The Economic Performance Report of Dubai for the first half of 2019 issued by DSC shows that the wholesale and retail trade activity continues to lead the economic activities in terms of contribution to Dubai’s GDP, which contributes 25.5%, achieving an added value of AED 53 bn with a growth of 3.3% compared to H1-2018. This sector pushes the overall economy to stand at a rise of 0.8%.
The trading activity is considered to be one of the most influential activities in Dubai and has the advantage of economies of scale. A number of the largest companies in the UAE and the region operate within this activity. Trade activity diversifies to cover a wide range of goods, whether commodities or capital goods, featured by its advantage of economies of scale. This advantage allows these enterprises to cut and reduce their costs and give them a highly competitive edge that supports the flexibility of this activity and enables it to adapt to economic conditions. The data of foreign trade prove this as exports grew significantly by 17.7% to AED 76 bn, and re-export activity increased by 3% to reach AED 210 bn. These high growth rates reflect the ability of the business sector to enter new markets and achieve trade margins that support the stability of this activity and support the local economy.
Transport and Storage Grow by 6.2%
Transport and storage activity achieved remarkable growth in the first half of 2019 by 6.2% compared to the same period in 2018 with an added value of AED 26.4 bn and driving the overall economy towards growth by 0.8%.
The transport and storage activity include all activities that are involved in the transport of persons and goods, water transport activities, handling and storage activities, postal activities, air transport activities of individuals and products, and supporting businesses.
Air transport have highest contribution in the transportation and storage sector due to the volume of production. The industry plays a vital role in Dubai's economy since it is highly related to all other economic sectors and mainly the activities driving the demand, such as tourism and trade activities. This is again another proof that activities in Dubai's economy are integrated, and it highlights the impact of diversity on the economic growth achieved.
Hotels and Restaurants Grow by 2.7%
Accommodation and food services activities grew by 2.7% with an value added of AED 10.6 billion, with a contribution of 5.1% to the overall economy.
According to the data of the Department of Tourism and Commerce Marketing in Dubai, the total number of international visitors to Dubai in the first half of 2019 reached 8.4 million visitors, with a growth rate of 3.2% compared to the same period in 2018. Such a stunning performance resulted from the dedicated efforts exerted by the concerned authorities to organize activities and events attracting visitors. Moreover, such a growth rate is achieved, relying heavily on Dubai’s remarkable infrastructure, facilities, tourism services, and being a distinctive and leading destination at the level of global tourism.
Manufacturing Grow by 0.3%
Manufacturing activity, which contributed 9.5% to Dubai’s GDP, grew by 0.3 percent in the first half of 2019, compared to the same period in 2018 with an added value of AED 19.8 bn.
2.1% Real Estate Activity
DSC Report shows that the real estate activity also grew by 2.1 percent in the first half of 2019 compared to the same period in 2018 and contributed by 7.4 percent to the total GDP driving the overall economy towards growth by 0.2.
In this regard, Al Muhairi pointed out that real estate activity is an essential and vital sector which has a significant impact over the emirate's economy, considering that the level of real estate prices and average rents is an influential factor in attracting investments and play a vital role in the stability of the population in the emirate.
He added: “This sector is characterized by diversity in terms of types of buildings and the availability of suitable supply in various areas, which makes it accessible to all, in addition to the modern and diverse facilities that Dubai enjoys in general and residential areas in particular.”
“All these features have contributed to boosting demand for real estate services and goods and other services produced by other activities. This led to having a positive impact in promoting the growth of the Emirate's economy,” Al Muhairi said.
He also underlined that mining, construction, professional activities, administrative services, public administration, education, health, arts, entertainment, other service activities and household activities grew by 2 % compared to the same period of 2018, with a combined contribution of 23 percent to Dubai’s GDP. The growth rate contributed to pushing up the GPD by 0.45%.
Meanwhile, agriculture, electricity, gas, water, waste management, information and communication activities, as well as financial and insurance activity, declined by 1.4% compared to the same period in 2018.
Al Muhairi said that these sectors contributed 17% to the total GDP. The decline had a slight impact on overall growth by 0.25% negative; they have a minor effect on the overall growth rate of Dubai GDP.
He concluded by stating: “The financial and insurance activity is the most important among these activities and achieved a real added value of AED 21.358 bn. This marked a slight decline of AED 304 million for the same period of 2018, due to higher interest rates compared to the interest revenues.”