Recent Search
Popular Searches
Dubai recorded real GDP growth of 3.2% y/y in H1 2023. Q2 growth accelerated to 3.6% y/y from the 2.8% recorded in Q1.
Source: Haver Analytics, Emirates NBD ResearchThe transport & storage sector was a key driver of overall GDP in Q2 as it expanded 10.7% y/y (10.5% y/y in H1), and accounts for 14.0% of Dubai’s real GDP. Much of this growth was driven by a continued strong rebound in international air travel, and Dubai’s role as a global hub for long-haul routes. Passenger numbers were up 56% y/y in the first half of the year according to the official GDP press release, reflecting not only the robust growth in visitors to Dubai, but also transit passengers travelling elsewhere in the world. However, as we have noted previously (see Transport & storage sector to remain a key driver of growth) other components of the sector such as land and maritime transport are also performing well and we expect them to continue to do so.
Related to the strong growth in transport & storage, the hotels & restaurants component of GDP saw the fastest annual growth in Q2, up 14.4% y/y, and 9.2% y/y in H1 2023. While the sector is a much smaller component of the economy as compared with some others (3.5% of total GDP), the robust growth rate meant that it still contributed strongly to overall GDP growth in Dubai in the first half of the year. The record visitor numbers to Dubai will have been chiefly responsible for the growth, but an expanding population will likely also have been supportive of more demand for domestic hospitality services.
Wholesale & retail trade remained the largest component of GDP in H1, at just short of a quarter of the total. Growth in the sector accelerated to 2.1% y/y in Q2 from 1.2% in Q1, but is still relatively muted given the strong growth in tourism.
Source: Haver Analytics, Emirates NBD ResearchReal estate activities also gained momentum in Q2, with growth accelerating to 4.6% y/y from 2.4% in Q1. According to DLD data, the number of transactions grew 35% y/y in Q2 (see Dubai Real Estate: Strong Q2, but growth moderates), although transactions growth slowed somewhat in the third quarter. Construction sector GDP grew 1.9% in both the first and second quarter of 2023, after contracting over the same period last year.
Manufacturing GDP expanded 1.3% y/y in Q2, and accounted for just over 8% of GDP. We expect that manufacturing will become increasingly important in Dubai and the UAE given strong government support for the sector (see Overview of the UAE manufacturing sector).
We retain our forecast for full year GDP growth of 4.0% in Dubai this year, which requires growth to accelerate in H2 from the H1 average of 3.2%. Base effects are supportive of this and the S&P Global PMI survey for Dubai continued to imply strong economic growth in Q3 as it averaged 55.6. Within this, the September reading was at a three-month high for the index with new orders at a four-year high and business confidence at levels last seen prior to the Covid-19 pandemic. With COP 28 approaching, and Chinese visitors still returning, we expect that the tourism sector, which has been the lynchpin of growth so far this year, will be supportive of higher annual growth in the second half of the year.
Daniel Richards
Facebook
Twitter
Linkedin
Email
