Dubai’s GDP growth is expected to accelerate in the next three years i.e. between 2019 and 2022 after recording the slowest pace of growth in the last nine years, according to S&P Global Ratings research.
The research said that increasing economic activities would boost the GDP growth for an average of 2.5 percent with Expo 2020. Traditional growth engines such as trade and transportation also help in boosting GDP growth.
Due to lower oil prices, declining residential property prices and the deterioration in regional political relations, the macroeconomic conditions in Dubai have been degrading since 2013, according to the S&P research.
“We expect a marginal pickup in economic growth to 2.4 percent in 2019, with support coming largely from the construction and real estate sectors. We expect the completion of Expo 2020-related infrastructure projects and additional residential housing supply to enter the market from existing projects this year,” said S&P.
It added: “A boost to tourism and related spending linked to Expo 2020 should drive somewhat stronger growth in 2020. However, after the Expo, economic growth will likely to ease in our view to around 2 percent through 2022, sustained by traditional growth engines such as trade and transportation.”
“In our view, relatively low oil prices, accompanied by slower regional demand and rising protectionism in the US and China, could further slow Dubai’s transshipment trade flows, which have been sluggish since 2016,” the report noted.
Earlier S&P Global Ratings has expected real estate prices in Dubai to fall by another 5-10 percent in 2019.
“However, a longer and deeper downturn in the real estate market than we currently anticipate could significantly dampen economic activity and increase pressure on government finances,” it added.
Dubai represents about 70 percent of UAE real GDP and it’s external trade accounts for about 72 percent of the UAE’s total non-oil trade.
“We expect the UAE’s economy will continue to face challenges in the medium term partly because of softer growth momentum in Dubai. The UAE’s economic growth will pick up to 2.6 percent by 2020 from 1.7 percent in 2018 in part due to increased economic activity associated with the Expo,” the report said.