HomeMiddle EastDubai Expo 2020 ‘can lift GDP by 2%’ through jobs, tourism boost – Politics & Economics

Dubai Expo 2020 ‘can lift GDP by 2%’ through jobs, tourism boost – Politics & Economics

The slowdown in the UAE’s non-oil real GDP growth appears to have bottomed out and Dubai can expect a 2 percent Expo 2020 boost to its GDP, according to a new report by Bank of America Merrill Lynch.

Its report said that the UAE has managed a soft landing, with a less pronounced cycle than in the global financial crisis in 2008.

It noted that incremental government capital spending for the Dubai Expo in 2020 can increase Dubai GDP growth by 0.5 percent in 2017-2019.

The report added that while there are a number of uncertainties surrounding meeting tourism targets and spending forecasts, Dubai Expo can raise Dubai’s GDP growth over the period of the fair in 2020-21 by 2 percent through higher job creation, consumption and tourism flows.

MENA economist Jean Michel Saliba said: “We expect overall UAE real GDP growth of 0.9 percent in 2017, from 2.2 percent likely in 2016. The headline figure masks a likely contraction in the oil sector due to the OPEC deal, but we see non-hydrocarbon real GDP growth picking up to 2.7 percent in 2017, from 2.3 percent in 2016.”

He added that over the medium-term, non-oil growth is expected to increase to 3-3.5 percent on the back of greater Expo 2020 projects.

After averaging 10 percent annual growth from 2000-10 and a slump in 2009, Dubai real GDP growth was 4.1 percent in 2015, slowing to 2.5 percent in the first nine months of last year.

The report said growth remains broad based although the construction sector is the laggard. The fastest growing sectors are restaurants and hotels, electricity, gas & water, transport and real estate.

It added that in Abu Dhabi, fiscal consolidation has slowed down non-oil real GDP growth materially, but the drag is expected to fade.

Saliba said the Dubai government is likely to record a small budget surplus in 2016 but he expects the fiscal balance to shift to modest deficits from 2017 onwards as capex associated with the new airport, new metro lines and Expo 2020 come on line.

The Dubai 2017 budget projects a deficit of $0.6 billion this year while the Abu Dhabi government could record a fiscal surplus this year at oil prices at around $50/barrel, he added in the report.

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