DUBAI, (AFP) -The economy of Dubai, whose financial woes rattled world markets in late 2009, is tipped to grow over the next two years on the back of robust economic activity in Asia, economists said Wednesday.
“We’re quite bullish” about economic growth in the southern Gulf emirate, a big-spending boomtown before its debt crisis, said Farouk Soussa, chief economist at Citibank.
“This year, we expect growth to be at 4.5 percent. We expect growth in 2012 to be at 6.3 percent,” Soussa told participants at a conference on Dubai’s economic outlook.
Its economy contracted around 2.4 percent in 2009, according to Dubai’s Department of Economic Development (DED), after the world financial crisis dried out foreign backing for a local economy growing at breakneck speed.
DED chief economist, Mohammed Lahouel, also sounded bullish on economic growth prospects for the trade hub, pointing out that trade and logistics had led the economic recovery.
“Given the vibrant recovery of the trade and logistics sector, growth is expected to accelerate in 2011... Conservative estimates would put growth between three to four percent in 2011,” he said.
“It was at 2.5 percent in 2010,” Lahouel said.
Dubai is geographically well-located to reap benefits from the rapid economic growth in Asia, according to Marios Maratheftis, a research chief at Standard Chartered bank.
“The global economy is in a super cycle, but this time it is in the east. We expect strong growth... Dubai is well located to benefit from this growth,” Maratheftis said.
Lahouel pointed to growth for Dubai’s major trading partners in Asia, especially India. “We expect in 2011 a continuation of recovery due to fast rising demand in (its) major trade partners,” he said.
Dubai sent jitters throughout global financial markets in late 2009 when it announced that it needed to freeze payments on the debt of its largest group, Dubai World.
But it has since reached a settlement with creditors to reschedule $14.7 billion of debt, while converting $8.9 billion of government aid into equity.
The emirate was last year by $20 billion in aid from the federal government of the United Arab Emirates, of which it is a member, and oil-rich Abu Dhabi which heads the federation.