Dubai economy grew by 2.2% in 2010 

Tuesday, 22 March 2011 00:00 -     - {{hitsCtrl.values.hits}}

Dubai, Reuters -Dubai’s economy is expected to have grown by around 2.2 percent in real terms last year, emerging from a similar contraction in the previous year, the Arab emirate’s statistics office said.

The global financial crisis shelved projects worth billions of dollars in Dubai, a trade-focused member of the United Arab Emirates. Its economy was further hit by debt troubles in state-owned firms last year. But recovery in trade flows and tourism was seen helping lift 2010 growth of the oil-wealth lacking emirate, which accounts for almost a third of the UAE’s gross domestic product.  

“The GDP for the first nine months of 2010 increased by 2.4 percent and Dubai Statistics Center expects that the GDP for the whole year will increase by around 2.2 percent,” it told Reuters in an e-mail.

The statistics office head said in February that Dubai’s economy grew 2.5 percent year-on-year in the first nine months of 2010.

Earlier on Sunday, its data showed that Dubai’s real GDP contracted by 2.4 percent in 2009, more than expected, due to a plunge in property and construction sectors. It expanded by 3.2 percent in the oil and property boom year of 2008.

The International Monetary Fund forecast the emirate’s real gross domestic product to have shrunk by 0.9 percent in 2009 and predicted a 0.5 percent growth for 2010.

Dubai’s nominal gross domestic product fell 14.2 percent to 294.2 billion dirhams ($80 billion) in 2009, around 54 percent of that of neighbouring Abu Dhabi, the data showed.  

In 2009, the construction sector shrank by 19.5 percent in real terms, while the real estate and business sectors plunged by 19.8 percent. Both sectors account for about a quarter of Dubai’s economy.  

“Since 2009 there was a bounce in activity with recovery in the global economy and the removal of some of the uncertainties around some of the Dubai debt issues,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi.

“When you look at Dubai, tourism, aviation and logistics are doing well ... The bit that is not doing so well is real estate and any activity around that,” he said.  

Concerns about Dubai’s total liabilities, estimated at around $115 billion or 144 percent of GDP, have eased after state-owned Dubai World sealed a deal last September to restructure almost $25 billion of debt.  

Worries still persist about the ability of Dubai and its companies to repay some of their bonds and loans worth billions of dollars in the next four years.

Dubai house prices, already nearly 60 percent off their peak, are set to drop another 10 percent over the next two years as new units are released onto a market awash with supply, a Reuters poll showed in January.

The economic output of the whole UAE, the world’s third largest crude exporter, is expected to grow by 3.4 percent this year as oil prices hold above $100 per barrel, fuelled by political turmoil in the Arab world, a Reuters poll showed last week.

Dubai’s GDP growth alone is forecast to quicken to 2.8 percent in 2011, the IMF said in March.