Dubai economy is set to grow by 4 per cent in 2015
Thanks to lower oil prices, Dubai’s tourism and trade sectors have benefited. It is anticipated that because of the aforementioned, the emirate’s economy will grow by 4% in 2015. According to the Department of Economic Development (DED) of Dubai, the economic growth of the United States and India as well as increased European demand will also enhance Dubai economy.
It is anticipated that two of Dubai’s main industries, tourism and retail, will increase considerably this year. In addition, lower oil prices benefits Dubai’s trade partners.
The United Arab Emirates (UAE) is anticipated to grow more than 3.5% this year even though the International Monetary Fund (IMF) forecasted the UAE growth rate to be 3% and 3.1% for 2015 and 2016 respectively. The IMF’s initial forecasts regarding the UAE growth rate were much higher (4.6%) before the oil slouch resulted in less corporate and real estate activity.
Thanks to the improvements made within several of Dubai’s sectors, the emirate’s GDP estimates have been reevaluated. Based on the DED’s findings, Dubai economy grew by 4% during the first six months of 2015 thanks to increased aviation, logistics, and trade and retail activities. All signs designate that Dubai will reach a 4% growth both in 2015 and in 2016.
Consistent with the forecasts made by the IMF, the UAE economy will benefit from an additional US$13 billion as a result of lifting the sanctions of Iran, which will lead to an increase of trade activities between the UAE and Iran from 2015 to 2018. Based on the IMF’s report, the additional US$13 billion is equal to 1% in GDP growth for each of the following three years.
Furthermore, 12% of the UAE’s non-oil exports were attributed to Iran in 2013. The 12% was equivalent to $12bn in 2013. Most of Iran-UAE non-oil export activity focused on re-exports via the Jebel Ali Port in Dubai.
In contrast, based on the purchasing managers’ index, Dubai’s non-oil private sector growth rate is unstable. In line with the Emirates NBD, the index slowed down as job hiring dropped to the lowest it has been for approximately three years or so during the last month.
Emirates NBD funds the monthly survey that analyses the UAE non-oil private sector’s business conditions that is conducted by Markit, a renowned company specializing in financial information services.
According to the survey, out of the three main sectors surveyed, travel and tourism is the weakest. However, the Emirates NBD anticipates that travel and tourism activities will rise during the last quarter of 2015.
In the meantime, inflation rate was anticipated to linger between 4.5% and 5% in 2015. According to the IMF, inflation rate will rise to 3.8% in 2015, 1.5% more than it was in 2014.