The transformations and economic shifts of Dubai.
Dubai is the second richest emirate in the UAE, after the capital state of Abu Dhabi. At present the economy of the UAE is likely to be the best performer in the Gulf, helped by preparations for Expo 2020 Dubai.
It is also the world’s third most open economy that relies strongly on foreign trade for revenue and wealth generation.
Oil has traditionally been Dubai’s largest industrial sector but at present about 95% of Dubai’s Gross Domestic Product is not oil-based.
In the early 1990’s only a couple of hotels were accessible for tourists and Dubai never had augmented oil revenues like Abu Dhabi so something had to change. The Burj Al Project in 1994 (Burj Al Arab Hotel) gave hope to the economy, as a long-term approach, an ambition to become the top tourist destination in the world.
Most visitors think that Dubai’s revenue came mainly from oil, but in reality, it used only a moderate quantity of oil reserves to produce trade, production and tourism facilities to build up Dubai’s economy. To survive the decline of fossil fuels, Dubai had to become a more vibrant and diverse economy.
In recent decades, Dubai has extended its non-oil sectors to sustain the flow of foreign exchange. For example, Dubai’s government is diversifying to a big extent from being a commercial-based economy to services and tourism. Tourism is crucial to Dubai’s economy, since it supports the emirate’s large retail industry as well as its hospitality sector
Dubai has seen a tremendous shift in its economy over the past 50 years. Some of Dubai’s significant investments were mainly impacted by the latest recession that struck the worldwide market.
After the financial crisis, Dubai has sought and received financial support from Abu Dhabi to manage its debt load. Dubai has overcome challenges and achieved growth in FDI last year despite decrease in global investments.
The International Herald Tribune has described Dubai as “centrally-planned free-market capitalism.”
Existing challenges and solutions
A drop in oil prices since mid-2014, combined with slower economic growth, has pushed down Dubai’s primary stock exchange index and liquidity on the stock markets of the UAE, but the Emirates are also trying to counteract this with an economic diversification strategy.
Despite the struggles and shifts Dubai has managed to shift the focus from concerns about the past towards future plans.
Dubai with utmost pride will be hosting World Expo 2020 and the preparation for this six month long series of events is what the focus is.
Dubai’s Economic Growth
Economic growth in Dubai will accelerate in 2019 and 2020, with tourism, logistics, transport, wholesale and retail industries.
In 2018, Dubai attracted Dh38.5 billion in foreign direct investment, a growth of 41 per cent year-on-year. Also, the start of 2019 has seen business activity picking up as more than 6,700 new business licences were issued, an increase of 29 per cent year-on-year; and Dubai Financial Market attracting Dh680 million in net foreign investment.
A recent study released by EY had forecast that Dubai Expo will add Dh122.6 billion to the emirate’s economy during 2013-2030.
Dubai is already seen as one of the most powerful financial centres in the world, and the new regulation allowing expatriates to remain in the country long after retirement , and of course the upcoming Expo 2020 will boost Dubai economy for decades.