FILE PHOTO: General view of Dubai's cranes at a construction site in Dubai, UAE - REUTERS
Dubai (Reuters): Dubai’s economy grew 1.94% in 2018, the government said on Wednesday, slowing down from a 2.8% growth rate in 2017 and hitting its slowest pace since a contraction in 2009 when the economy was hobbled by a debt crisis.
Dubai, which has a diversified economy that focuses on tourism and international business services, has been hurt by a rough patch amid a downturn in its real estate market.
“A weakening external backdrop, a strong U.S. dollar and the ongoing correction in the property market are headwinds for a number of vital sectors,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
Property prices in Dubai have fallen by more than a quarter from their peak in 2014. S&P said last month it expects prices to fall another 5-10% this year due to a continued gap between supply and demand, before steadying in 2020.
Dubai needed a $20 billion bailout from oil-rich Abu Dhabi to escape a debt crisis in 2009 caused by collapsing property prices, which had threatened to force some state-linked companies to default on billions of dollars of debt.
Analysts expect some economic recovery for Dubai ahead of 2020 when the city hosts the World Expo event.
The government said GDP growth was largely driven by the performance of trade related activities, which grew by 1.3% in 2018 from a year earlier, representing 18.1% of the total growth achieved last year.
It said real estate activity grew 7% in 2018 and accounted for nearly 25% of total economic growth.
In 2017 real estate grew 7.3%.