UAE’s real non-oil GDP to double by 2020
Dubai’s real GDP accelerated to 4.9 per cent year on year in the first half of 2013
Dubai’s successful bid to host Expo 2020 will be a strong catalyst in the economic growth of UAE in general, and Dubai in particular, with the country’s real non-oil GDP expected to double between now and 2020, according to Monica Malik, chief economist of EFG Hermes.
Speaking at a panel discussion at the Meed’s Destination Dubai 2020 conference on Wednesday, Malik said EFG Hermes has upgraded its 2014 GDP growth forecast for the UAE from 4.7 per cent to 5.4 per cent on the back of Dubai’s Expo 2020 win.
“Our growth upgrade is largely due to a pickup in investment outlook as a result of the successful Expo bid. 2014 should be the fourth consecutive year in which the UAE’s real non-oil GDP strengthens. We now view the UAE as having the second strongest real non-oil GDP growth in the region after Qatar,” said Malik.
The pick up in the economic activity, in the wake of the 2008 global crisis, has been primarily driven by consumption, supported in 2011 by the Arab Spring and the consequent fund flows that resulted in a rise in property prices. However, in 2013, the UAE witnessed a broad-based rise in investment activity.
Dubai’s real GDP accelerated to 4.9 per cent year on year in the first half of 2013. Two sectors that saw particularly strong growth were hotels and restaurants (13.7 per cent) and manufacturing (13.3 per cent).
“Wider investment growth in Dubai was already a part of its vision 2020. The Expo win will add to Dubai’s confidence and fast track the implementation,” Malik said.
The Expo will build on Dubai’s core sectors such as tourism, trade and transportation and is expected to reach beyond the expo site.
Investment in the UAE started picking up in a meaningful way in 2013.
In 2014 and beyond, running up to the Expo, investments will be broad based in the real estate, transportation, trade infrastructure, hotels and hospitality sectors.
With the investments picking up momentum, Malik sees a multi-layer investment multiplier kicking in.
“We estimate real non-oil GDP for the UAE around 5 to 6 per cent until 2015, increasing to 6.5 to 8 per cent in 2016-2018 and 8 per cent to 10 per cent in 2019-2020,” Malik.
With double-digit real GDP growth, inflation is also expected to accelerate between now and 2020.
Malik expects inflation to remain relatively tame — unlike during the previous boom (2005-2008) — due to a strong dollar, the absence of global food-price inflation pressures and macro-prudential measures from the government and the central bank in terms of higher registration fees for property transactions, mortgage caps based on higher loan-to-value ratios to rein in speculation.
- US, EU protectionist policies may be a blessing in disguise for GCC suppliers
- Dubai to Doha: How far can you stretch your dirham?
- Tunisia 2020 investment conference: 145 mega projects on offer
- GCC tax on expats' income and remittances would be highly regressive: IMF
- 'The worst is over for Qatar's trade balance': BMI Research
- Kuwait economy's growth one of the highest in the world
- IMF raises UAE's 2014 growth forecast to 4.4% thanks to Expo 2020, rising property prices
- UAE: GDP of non-oil economic sectors UP
- Regaining momentum? Non-oil activity raises Kuwait's GDP to $175 billion
- UAE economy estimated to score 9.7% real GDP growth for 2006