26 April 2018
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Dubai GDP grew 2.8% in 2017

Dubai's real GDP expanded 2.8% last year to reach AED 389.4bn, in line with our forecast of AED 389.9bn.

By Khatija Haque

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Dubai’s real GDP expanded 2.8% last year to reach AED 389.4bn, in line with our forecast of AED 389.9bn.  However, the growth rate was lower than the 3.5% we had pencilled in, because 2016 GDP growth was revised up sharply from 2.9% to 3.4%.  Manufacturing, utilities, transport & storage, financial services and real estate services were all revised higher in 2016, while wholesale & retail trade sector, hotels & restaurants and construction were revised down.

Dubai: GDP growth slowed in 2017

Source: Dubai Statistics Centre (DSC), Emirates NBD Research

The biggest contributor to Dubai’s growth last year came from the transport & storage sector, which grew 4.5% y/y and accounts for nearly 12% of Dubai’s GDP, followed by real estate services which grew 7.3% y/y and account for 7% of Dubai’s economy.  This is separate from construction, which grew 3.5% y/y in 2017, the fastest rate of growth since the financial crisis.  Hotels & restaurants (5% of the economy) grew 8.0% y/y.    

Sluggish retail trade sector weighs on growth

The largest sector of Dubai’s economy is wholesale & retail trade, which accounts for about 27% of Dubai’s real GDP.  This sector grew just 0.9% last year, only marginally better than the 0.5% growth in 2016.  Growth in wholesale & retail trade over the last two years has been much slower than previous years – the average growth rate for the sector was 4.7% between 2010 and 2015. 

The softness in the trade sector has been partially offset by faster growth in smaller sectors such as health & social work (13.7% y/y) and arts, entertainment & recreation (9.0% y/y). 

2018 growth forecast under review

With the economy having grown 2.8% last year, and the softer PMI surveys in the first quarter of 2018, our 4.1% 2018 GDP growth forecast for Dubai now looks too high.  However, we are waiting for full UAE GDP statistics for 2017 before revising our growth forecast. 

 

Written By

Khatija Haque Head of Research & Chief Economist


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