Dubai GDP grew 2.1 percent in H1 2019

Dubai’s economy grew 2.1% y/y in H1 2019, faster than the 1.8% growth recorded in H1 2018.  Quarterly data shows real GDP growth broadly steady at between 2.0% y/y and 2.2% y/y over the last four quarters. However, growth has been slower than the series average of 3.3% since Q4 2017.

Dubai's real GDP growth

Source: Dubai Statistics Centre, Haver Analytics, Emirates NBD Research

Transport & storage was a key driver of growth in H1 2019

Transport & storage saw a sharp acceleration in growth in the first half of this year, expanding 6.2% y/y compared with 1.5% y/y growth in H1 2018. Activity in this sector picked up strongly in Q2 2019 (11.6% y/y), which is consistent with the surge in new export orders captured in the UAE PMI surveys in Q2 2019.  Transport & storage accounts for 12.7% of GDP.  Dubai’s largest sector remains wholesale & retail trade at 25.5% of real GDP.  This sector also grew at a faster rate in the first half of this year, expanding 3.3% y/y compared with 0.2% growth in H1 2018. 

However, financial services & insurance (10.3% of GDP) contracted -1.4% y/y in H1 2019.   There was a slowdown in real estate activities, although the sector still posted positive growth of 2.1% in H1 2019, while construction sector growth also slowed sharply to 1.0% y/y in H1 2019 compared with 6.6% growth in H1 2018.    The manufacturing sector contracted -0.9% y/y in Q2 but posted marginally positive growth of 0.3% y/y in H1 2019. 

The fastest growing sector in Dubai in H1 2019 was health and social work activities, which expanded 7.5% y/y, but this sector is relatively small at just 1.1% of Dubai’s real GDP. Hotels & restaurants grew at a slower rate in H1 2019, expanding 2.7% y/y compared with 4.9% y/y growth in the same period last year.  Utilities and information & communication sectors contracted in H1 2019 at -1.0% y/y and -1.7% y/y respectively.   

The official H1 GDP data, together with softer PMI survey data in Q3 suggests that our previous 3.0% forecast for Dubai’s annual growth now looks too optimistic, and we have revised it down to 2.0%.