Dubai sees 2004 GDP growth at 16.7%
Trend expected to continue in 2005 supported by initiatives and government support of private sector.
Mohamed Ali Alabbar, director general, Department of Economic Development (DED), Government of Dubai, described the year 2004 as “a golden year,” asserting that most of Dubai’s economic sectors had broken previous growth records in the year. Statistics compiled the by DED suggest that the Emirate’s GDP rose historically by 16.7% in 2004 to touch almost AED100 billion, as measured by current prices.
Affirming that 2004 had been one of the best periods for the UAE economy in general and Dubai in particular, he said that he anticipated this strong growth to continue throughout 2005, predicting that Dubai’s GDP would touch the AED110 billion mark and achieve 10% growth at current prices.
“At current prices, Dubai’s GDP has recorded a phenomenal increase to AED98.1 billion in 2004 up from AED84.1 billion in 2003,” said Alabbar. “When compared to AED62.3 billion in 2000 and AED41.2 billion for the year 1995, this puts the accumulated annual growth of Dubai’s economy in the last decade at 10%, the highest rate of growth in the world,” he explained.
“The phenomenal growth in 2004 is the result of several factors, including the ambitious initiatives launched by General Sheikh Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Defence Minister,” said the DED Director General. “The Government of Dubai’s unlimited support for the private sector coupled with dramatic increase in local spending, the constant growth of non-oil sectors and the sustained high oil prices have all contributed to Dubai achieving record growth rates,” he added.
Alabbar pointed out that last year’s performance indicators also reflected the success of the economic diversification policy of the Emirate. He said the policy had added maturity and vitality to the economy by enabling it to develop resistance to any unforeseen circumstances faced by one or other sectors and asserted that the momentum would be sustained for many years to come.
“The expansion and development in the non-oil sectors have played a pivotal role in the growth of the Emirate’s GDP, despite the sustained high oil prices,” he said. “Although oil contribution to the GDP grew 10.9% in 2004, the corresponding growth of 17% in the contribution of non-oil sectors enabled Dubai’s GDP to reduce its dependency on oil to 6% in 2004 down from 7% in 2003,” he added.
“Measured by current prices, the contribution of non-oil sectors to the emirate’s GDP has increased from AED78.22 billion representing 93.4% in 2003, to AED91.5 billion representing 94.3% in 2004. This is a significant increase when compared to AED55.9 billion in 2000 and AED34 billion in 1995,” he said.
Alabbar noted that the positive growth in 2004 was clearly reflected in the continuous inflow of foreign capital - a trend that is expected to continue with the prevailing lucrative return on investment in key sectors. In addition, the aggressive initiatives by the government and large companies in the Emirate have helped local and international interest rates to stabilize at low levels, encouraging private investments and offering opportunities for a wide spectrum of segments.
“Economic indicators showed a quantum leap in the construction sector for the third year in line, making it one of the key elements of growth besides trade, tourism and aviation,” said Mr. Alabbar. “The growth in cross sector relations has further vitalized these sectors with the increase in tourist numbers having a positive impact on trade and services, tourism and trade benefiting from the continuous growth in the services sector and the exceptional growth of the construction sector creating similar positive impact on trade, services and banking,” he added.
According to DED estimates, the construction sector achieved the highest growth rate among Dubai’s GDP components for 2004, registering 29% growth and lifting its contribution to AED11.1 billion up from AED8.6 billion in 2003. When compared to the sector’s contribution of AED5 billion in 2000 and AED3.4 billion in 1995, the figures offer a clear indication of the increasing number of quality real estate developments by public and private sectors in the Emirate.
The real estate sector itself achieved the second highest growth rate, with 22% growth in returns, which increased to AED10.3 billion in 2004 compared to AED8.4 billion in 2003. Comparative figures for 2000 and 1995 stand at AED6 billion in and AED4.3 billion respectively.
Alabbar praised the record 16.6% growth rate in the industrial sector, with its contribution to the Emirate’s GDP increasing to AED15 billion compared to AED12.9 billion in 2003, thus making it the second largest individual contributor. He said the growth was a result of the continuous effort by the government to diversify its income resources and establish a strong industrial base capable of meeting local needs and best utilizing Dubai’s strong trade relations with external markets. He pointed out that the industrial sector’s contribution to Dubai’s GDP had been just AED 10 billion in 2000 and AED 4.6 billion in 1995.
Telecommunications, transport, travel and freight sector succeeded in enhancing its lead position as the largest contributor to the emirate’s GDP, growing by 19.3% to AED16.24 billion in 2004 from AED13.6 billion in 2003. The Trade sector alone grew by 14.7% from AED12.9 billion in 2003 to AED14.8 billion in 2004.
The contribution of the financial sector increased to AED9.8 billion in 2004 from AED8.6 billion in 2003, a growth rate of 13%. In the tourism sector the hospitality and catering alone achieved 16.4% growth in 2004 to AED4.4 billion from AED3.7 billion in 2003, while the governmental services sector contribution grew 4% from AED7.2 billion to AED7.5 billion.
Alabbar said he estimated the economic growth to continue throughout 2005 supported by the high confidence in the local economy by investors from inside and outside the region. He also said the government’s commitment to develop and enhance business, with major public and private sector partnerships would provide new opportunities for growth and investment.
He expected that economic activity in 2005 would see a continuing trend from the previous year resulting in the establishment of a several emerging companies in addition to expansion plans being implemented by established private and public joint companies.