14 December 2022
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Dubai GDP grew 4.6% in the year to September

The emirate is on track to achieve our full year GDP growth forecast of 5.0% in 2022.

By Khatija Haque

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Dubai’s economy grew 4.6% y/y in the first nine months of 2022, putting it on track to achieve our 5% full year GDP growth forecast. Growth slowed to 2.3% y/y in Q2 but then picked up again to 6.0% y/y in Q3.

Dubai GDP grew 6.0% y/y in Q3 2022

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

The fastest growing sectors in the year-to-September were hospitality (28.0% y/y), transport and storage (26.3% y/y), and arts, entertainment and recreation (18.1% y/y). However growth in these sectors was strongest early in the year off the low pandemic base, and momentum has started to normalise in Q3 2022.

Manufacturing and utilities output growth has accelerated in Q3 on an annual basis, as has wholesale & retail trade.  Overall however, wholesale & retail trade GDP growth has slowed this year relative to 2021, but this is likely also due to base effects post-pandemic.

Construction output contracted by -3.1% y/y in the first nine months of this year, while real estate activities (the services industry around real estate) grew 2.5% y/y after growth of 20% in 2021.   

Looking at the sector breakdown of GDP over the last seven years, it is clear that wholesale & retail trade remains the largest single sector in Dubai’s economy, accounting for around 25% of GDP. However, the sector share of GDP has declined slightly since 2015, while the relative importance of construction & real estate services and restaurants & hotels has increased. Manufacturing, financial services, and transport & storage still account for 10-11% of Dubai’s GDP respectively, broadly unchanged since 2015.

Key sectors as a share of real Dubai GDP

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

Looking ahead, the UAE government wants to more than double the size of the manufacturing sector by 2031 by encouraging investment in food and beverage production, pharmaceuticals, petrochemicals, rubber and plastics, medical technology and other industries.  Last month, the Prime Minister launched a new UAE tourism strategy to increase investment in the sector with a view to drawing 40mn visitors to the country by 2031.  We expect faster growth in these sectors over the medium term.

In 2023 however, we expect Dubai’s GDP growth to slow to 3.5-4.0% from an expected 5.0% this year and 6.2% in 2021.  This would still be faster annual growth than was achieved in 2016-2019. Dubai is an open, services-based economy that is not immune from the impact of slower global growth, softer merchandise trade volumes and slowing consumption spending on the back of tighter monetary policy.

 

Written By

Khatija Haque Head of Research & Chief Economist


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